Canadian Broadcasting Regulation and the Digital Television Transition

Canadian Broadcasting Regulation and the Digital Television

Transition

Gregory Taylor

PhD Dissertation

Department of Art History and Communication Studies Faculty of Arts

McGill University

Montreal, Canada

A thesis submitted to McGill University in partial fulfilment of the

requirements of the degree of Doctor of Philosophy

August 10, 2009

©Gregory Taylor, 2009.

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Abstract

This thesis examines the evolution of Canadian broadcasting regulation since the adoption of the 1991 Broadcasting Act with a specific focus on the digital television transition. For Canada, this technological shift exemplifies many of the greater changes in public policy in the last two decades: a faith in market mechanisms, light- touch regulation, co-regulatory approaches, and the powerful influence of new technologies. This dissertation will address the following central question: does the policy surrounding the transition to digital television broadcasting pose a challenge to traditional concerns of the role of broadcasting in Canadian democracy? Utilizing the approach of institutional political economy, this study is informed by primary government and industry documents and interviews conducted with key actors within Canadian broadcasting. This dissertation offers a unique contribution to knowledge in three areas: establishing clear parameters for the differences between policy and regulations in Canadian broadcasting; offering the first comprehensive study of the Canadian digital television transition; and analyzing the growth and impact of self and co-regulation in Canadian broadcasting policy. The results of this study speak to the power dynamics amid the range of actors involved in the Canadian policy process, the influence of new technologies, and the greater prevailing policy directions in broadcasting since the 1991 Broadcasting Act was adopted.

Cette thèse examine l’évolution de la réglementation canadienne de la radiodiffusion depuis l’adoption de la Loi sur la radiodiffusion (fédérale) en 1991 en se concentrant plus particulièrement sur la transition à la télévision numérique. Pour le Canada, ce changement de cap est révélateur des grandes modifications que les politiques publiques ont connues dans les deux dernières décennies : une foi dans les mécanismes de marché, une réglementation en pointillé, des approches axées sur la coréglementation et la puissante influence des nouvelles technologies. La question centrale étudiée dans ce mémoire est la suivante : la politique sous-jacente à la transition à la télédiffusion numérique constitue-t-elle un défi en regard des préoccupations traditionnelles afférentes au rôle de la radiodiffusion dans la démocratie canadienne ? Adoptant une approche de économie politique institutionnelle, cette étude se fonde sur l’étude de documents gouvernementaux ou provenant des entreprises privées œuvrant dans le secteur ainsi que sur des entretiens effectués avec certains acteurs clés de la radiodiffusion canadienne. Cette thèse offre une contribution unique au savoir quant à trois aspects : établir des paramètres clairs permettant de différencier les politiques de la réglementation dans le domaine de la radiodiffusion ; offrir la première étude détaillée sur la transition canadienne à la télévision numérique, et présenter une analyse du développement et de l’impact de l’autoréglementation et de la coréglementation dans les politiques canadiennes relatives à la radiodiffusion. Les conclusions de cette étude mettent en lumière les dynamiques de pouvoir existant entre les divers acteurs engagés dans le processus d’élaboration et d’adoption des politiques canadiennes, l’influence des nouvelles technologies et les grandes orientations politiques ayant prévalu dans le domaine de la radiodiffusion depuis l’adoption de la Loi sur la radiodiffusion (fédérale) en 1991.

Table of Contents

List of Tables 5 List of Acronyms 6 Acknowledgements: 7 Introduction and Literature Review 8 i) Regulation and the Public Interest 13 ii) The New Railway 27 iii) The Matter of Broadcasting 35 iv) Policy vs. Regulations 40 v) Methodology: 43 vi) Chapter Outline 46

Chapter One: The Roots of Broadcasting Regulation and the CRTC: History and Theoretical Foundation 51 1.1 The Roots of Regulation 54 1.2 Regulation and the Nation-State 67 1.3 The CRTC 71 1.4 Arm’s Length: Pay-TV and DTH Satellite 75 1.5 A New Act and the Digital Era 83

Chapter Two: Technology and Neoliberalism 87 2.1 The Chicken/Egg of Technology/Regulation 92 2.2 Explaining the Digital Era 97 2.3 Digital Adaptation and Regulatory Challenges 106 2.4 Technology as Ideology 112 2.5 The Rise of Neoliberalism 115 2.6 Neoliberalism and Canadian Broadcasting Regulation in the Digital Era 125 Conclusion: 130

Chapter Three: Policy Statements - the Digital Television Transition 135 3.1Early Studies: United States and Canada 141 3.2 Pay and Specialty Services 152 3.3 High Definition Television (HD) 160 3.4 Broadcasting Distribution Undertakings (BDUs) 165 3.5 Over-the-Air Broadcasting 173 Conclusion 179

Chapter Four: Regulations – the Digital Television Transition 183 4.1 Pay and Specialty Services 191 4.2 High Definition Television (HD) 202 4.3 Broadcasting Distribution Undertakings (BDUs) 208 4.4 Over-the-Air Broadcasting 215 Conclusion 220

Chapter Five: Self and Co-Regulation and the Digital Television Transition 223 5.1 The Theory of Co-Regulation 230 5.2 Self and Co-Regulation and Canadian Broadcasting Policy 235

5.3 Self and Co-Regulation and the Canadian Digital Television Transition 240 5.3.1 Task Force on the Implementation of Digital Television. 241 5.3.2 The Digital Migration Working Group and Digital Code Working Group 245 5.3.3 Canadian DTV Inc (CDTV) 248 Conclusion 251

Chapter Six: Conclusion 257

Reference List 281

List of Tables

Table 1 International Shut Off Dates…………………..………………………………….106

Table II Adoption and growth / decline rate of various video technologies in Canada...... 108

Table III Task Force on the Implementation of Digital Television ……..……………...….243

List of Acronyms

ASO – Analogue shut off

BBG – Board of Broadcast Governors

BDU – Broadcast Distribution Undertaking

CAB – Canadian Association of Broadcasters

CBC – Canadian Broadcasting Corporation

CBSC – Canadian Broadcast Standards Council

CCSA – Canadian Cable Systems Alliance

CCTA - Canadian Cable Television Association

CDTV – Canadian Digital Television

CMR – Communication Monitoring Report

CRTC – Canadian Radio-Television and Telecommunications Commission

DOC – Department of Communication

FCC – Federal Communication Commission (U.S.)

HD and HDTV – High Definition Television

ICT – Information and Communication Technology

OTA – Over the Air

PIAC - Public Interest Advocacy Centre

PPV – Pay Per View

SD – Standard Definition

Acknowledgements:

Sincere thanks to Anuradha Gobin, Stephen Pender (U of Windsor), Marc Raboy, Clementine Sallée, Darin Barney, Bram Abramson (McCarthy Tétrault), Jeremy Shtern, Normand Landry, Aysha Mawani, Geneviève Bonin, Claire Roberge, Maureen Coote (McGill), Bob Reaume (Association of Canadian Advertisers), Jane Britten (CRTC), Peter Foster (CRTC), Richard French (Ottawa U), André Bureau and Sophie Émond (Astral Media), Wolfgang Schulz (Hans-Bredow Institute), Stefaan Verhulst, Damian Tambini, Liza Frulla, Michael McEwen, Fonds québécois de la recherche sur la société et la culture, the Beaverbrook Canadian Foundation, Institute for European Studies, Media@McGill

And especially my parents, Gregory and Helen Taylor, for love and support.

Introduction and Literature Review

The immediate requirement, the crucial next step, is to take advantage of the self-evaluation the digital revolution is demanding of the field, embrace the critical juncture we are in, and dedicate the field to being a leading participant in it. If we do, the future is bright... (Robert McChesney, 2007, p. 36)

The “field” in the above quote is the academic study of media policy; the “critical juncture” refers to the current structural upheaval facing the political economy of communication, a fleeting historical moment McChesney believes will have repercussions for decades to come.

Indeed, the time is ripe for a fresh evaluation of many of the established perspectives and policies in the relationship between communications, industry, government, and citizenry. Around the world nation-states are grappling with a rapidly morphing media universe amid calls for increased privatization, on the one hand, and the protection of domestic industries and traditional concerns about informed citizenry on the other. All this is happening while countries find themselves obligated to demands of supranational agreements, such as the North American Free Trade Agreement or the European Union’s Television Without Frontiers Directive, which further limits the ability of nation states to enact truly ‘national’ media policies. The increasingly cosmopolitan populations of many countries are challenging long-established notions of citizens as “a people”, calling into question the rationale behind policies of cultural

protectionism and academic theories of cultural imperialism. Whose culture is being protected or threatened? To add to the policy burden, historical technological divides, such as that between telephony and broadcasting, are increasingly blurred as television programs are viewed on cellular phones and radio is received via the internet. The capacity of governments to deliver services, including information services, has become more and more restricted by the dual demands of addressing the public good and increased competition in the global media markets.

McChesney’s appeal to academics to seriously engage in media policy issues echoes an earlier claim by William Melody, who wrote in 1990:

For many aspects of policy issues, independent academic research can provide

an assessment of issues which examine aspects of reality that elude special

interest research and the normal analytical horizons of policy makers.

(Melody, 1990. p. 33)

This dissertation seeks to accept and expand upon the call by McChesney and Melody and lend critical academic assessment to the changing role of regulation in Canadian broadcasting policy; in particular as it relates to the transition from an analogue to a digital television system. As noted by Michael Feintuck in 1997, the traditional rationale for broadcasting regulation stands “in desperate need of reappraisal”

(Feintuck, 1997).

To further Melody’s point: the essence of the critical “issues” associated with the digital television transition are difficult to grasp, especially when left to the

announcements of key “special interest” industry players. The increasingly-influential private sector broadcasters and distributors are prone to saying one thing at public hearings, where they often speak of difficult times in dire need of the easing of statutory restrictions (or maintenance if it is to their benefit), and quite another before shareholders, where they proclaim a strong position in the marketplace (DeCloet,

2008). This information shell game has become a standard part of the policy process in Canadian broadcasting.

Equally predictable in Canada, are calls for regulatory protection coming from

content producers and arts groups, who cloak themselves in robes of national culture,

even though they too are often seeking an industrial advantage over competitors both

at home and abroad. Despite such deliberate attempts to fog the facts, a range of

studies have concluded that the central debates surrounding broadcasting policy in

Canada have demonstrated a stubborn consistency over the decades (Peers 1969;

Johnston, 1980; Canada, 1986; Elllis, 1979). Issues of quality, national content,

Canadian control, and accessibility have remained constant. The digital television

transition presents a critical juncture where such central pillars may be reassessed.

The “analytical horizons of policy makers” in Canada are often hampered by the contradictory positions of politicians who desperately wish to impose their ideological brand upon the communications system, while fearing the political damage done by appearing to tamper with an arm’s length public regulator. In 1970, only two years after the establishment of the Canadian Radio and Television

Commission (CRTC - “Telecommunications” was added in 1976), Canadian legal

scholar Ronald Perry wrote: “One cannot help but feel that the underlying motivation

behind the move to independent status for the regulatory agency was the politically touchy nature of broadcasting” (Perry, 1970, p.14). Politicians, whose job it is to create policy, have been accused of shying away from this responsibility when it involves sensitive issues in broadcasting, leaving a policy vacuum which has, at times, been filled by the public regulator itself (Hall, 1990). This has rarely been more apparent than in the policy process surrounding digital television.

The “reality” of note for this dissertation is how the Canadian Radio-Television and

Telecommunications Commission has employed broadcasting regulation as the

Canadian broadcasting system transitions from analogue to digital broadcasting

(roughly 1995-2008). This transitional period is ripe for analysis as the CRTC is

conducting a review of the regulatory framework for radio, television and distribution

undertakings in 2008-2009 which may fundamentally alter regulation in the years to

come (CRTC, 2006). Given the rapidly changing regulatory environment, this

dissertation will restrict its analysis to developments pre-2009. Now is the time to

assess the impact of the CRTC’s regulatory methods thus far in the digital era, in

particular with regards to traditional concerns of broadcasting as a necessary tool of

an informed citizenry.

Despite the importance of this digital transition, and Canada’s tradition of critical

political economy in media studies, there is a paucity of academic work in this area.

A small academic industry has grown around aspects of internet governance, and

digital copyright policy has been the site of enormous scholarly as well as popular

involvement in recent years; however, the digital television transition remains by and

large ignored by Canadian critical communications scholars. The digital television

transition in Canada has thus far developed as an industry-led project, largely free from public or academic scrutiny. This dissertation seeks to instigate a greater discussion of this transition and will offer a unique contribution to this area of scholarship in three areas: establishing clear parameters for the differences between policy and regulations in Canadian broadcasting; offering the first comprehensive study of the Canadian digital television transition; and analyzing the growth and impact of self and co-regulation in Canadian broadcasting policy.

In many ways, the digital television transition in Canada is emblematic of the evolution of Canadian broadcasting regulation over the last twenty years. The CRTC has undergone a substantial shift in this period, changing its regulatory approach from one of direct involvement, to one which espouses using regulation as infrequently as possible and encouraging a regulatory light-touch and increased co-regulation (I will

later argue that the more frequently used term ‘self-regulation’ is a misnomer) within

industry (von Finckenstein, 2007). This regulatory flip was chronicled by Marc

Raboy, who argued that in the late 1980s “The CRTC completely rewrote its radio,

television and cable regulations, and declared it would henceforth take a

"supervisory" approach to its task, relying on industry to adopt measures of "self- regulation" (Raboy, 1989, p. 74). Seminal historical studies of the Canadian broadcasting system by Marc Raboy (1990) and Frank Peers (1969 and 1979) do not extend beyond the 1991 Broadcasting Act (only as far as 1968 in the case of Peers),

making the 1991-2008 era fertile ground for new scholarship.1 This dissertation will address the following central question: does Canada’s policy surrounding the transition to digital television broadcasting pose a challenge to traditional concerns of the role of broadcasting in Canadian democracy?

The roots of broadcasting regulation as well as the change in regulatory direction of the last two decades will be more thoroughly analysed in chapter one. This introductory section will provide clear parameters for essential concepts in broadcasting regulation, establish some context for the unique characteristics of the

Canadian broadcasting experience, as well as offer a literature review of the key authors and central studies in the field.

i) Regulation and the Public Interest

A challenge for this dissertation will be establishing what exactly is meant by democratic accountability in media policy and how regulation factors into that definition. Central to this debate is the vital but nebulous concept of ‘the public interest’. A 2004 external advisory committee on “smart regulation” for the Canadian federal government notes,

Broadly speaking, regulation is meant to serve the public interest. The

Committee found that there is no shared definition of the public interest

among government departments. (Canada, 2004, p. 12)

1 The French version of Raboy’s Missed Opportunities extends to 1996.

This ambiguity is not restricted to the Canadian experience – defining the public interest has been a consistent problem since the development of broadcasting regulation early in the last century. In 1943, NBC went to the United States Supreme

Court to argue the term “public interest” was so meaningless as to be unconstitutional under U.S. law (Napoli, 2001a, p. 68). NBC lost the case, however, the debate is far from over. This central normative pillar of broadcasting policy, unless properly

defined, runs the risk of reduction to “an empty vessel” to be filled with the values of

the dominant social group (Feintuck, 2004, p. 37). For much of the last two decades,

that dominant group has been an advocate of a stronger role for the private sector in

communications.

The spoils for this debate are substantial. The U.S. Communications Act of 1934

employs the phrase “public interest” over 11 times and it appears 40 times in the U.S.

Telecommunications Act of 1996, including the following key passage regarding the

digital transition:

PUBLIC INTEREST REQUIREMENT- Nothing in this section shall be

construed as relieving a television broadcasting station from its obligation to

serve the public interest, convenience, and necessity. In the Commission's

review of any application for renewal of a broadcast license for a television

station that provides ancillary or supplementary services, the television

licensee shall establish that all of its program services on the existing or

advanced television spectrum are in the public interest. (1996 5.d.)

The Canadian Broadcasting Act of 1991 makes significant use of the phrase “public

interest”, including the following central policy statement concerning the Canadian

Broadcasting Corporation (CBC):

…where any conflict arises between the objectives of the Corporation set out

in paragraphs (l) and (m) and the interests of any other broadcasting

undertaking of the Canadian broadcasting system, it shall be resolved in the

public interest,… (1991 Broadcasting Act, 3(n))

In Canada, and other countries, the public interest, however defined, is clearly a

regulatory trump card. Robert Horwitz writes that the public interest in telecommunications is “the black box whose meaning or representation is the terrain

of the struggle” (Horwitz, 1989, p. 9). With the rise in stature of private sector

broadcasting in recent decades, the public interest and the interest of private market

forces have often been presented as one and the same, usually with the implied

intention of maintaining or increasing the position of key economic players. In doing

so, the private sector dictates the terrain of the struggle. Former Federal

Communications Commission (FCC) chair Mark Fowler expressed this position with a certain rhetorical flourish in 1982:

(The FCC) should rely on the broadcasters’ ability to determine the wants of

their audiences through the normal mechanisms of the marketplace. The

public interests, then, defines the public interest (Fowler and Brenner, p. 210).

Such has not always been the case. The public interest has historically been seen as a necessary limit to private property imperatives when they pose a challenge to essential democratic principles. As one of Fowler’s predecessors Newton Minow,

FCC chair under the Kennedy administration, said to the National Association of

Broadcasters in 1961, “You earn your bread and butter using public property. When you work in broadcasting, you volunteer for public service, public pressure and public regulation” (Minow, 1961). Newton goes on to further contradict the position taken by Fowler some two decades later:

Above all, I am here to uphold and protect the public interest.

What do we mean by “the public interest”? Some say the public interest is

merely what interests the public.

I disagree.

So does your distinguished president… (Minow, 1961)

Even at the highest levels of the world’s most powerful broadcasting nation,

contradictions of opinion regarding the public interest are commonplace. Some

clarification is required. Upon surveying relevant literature, UK legal scholar Mike

Feintuck observes: “a conjunction of opinion viewing the public interest as being

intimately connected with some vision of community, human dignity, and an ongoing

social order, and having a strong connection with citizenship” (Feintuck, 2004, p. 40).

This dissertation agrees with Feintuck’s assessment:

…a core meaning (of public interest) could be established in the context of

regulation which identifies it closely with the values of equality and

citizenship within a democracy. (2004, p. 248)

This definition is well-suited to the policies outlined in section three of the 1991

Broadcasting Act; in particular that “the Canadian broadcasting system should safeguard, enrich and strengthen the cultural, political, social and economic fabric of

Canada” (3 d,i). “Public interest” is not one of the fifteen definitions included in Part

One of the 1991 Broadcasting Act, despite its use in the text. In order for broadcasting regulation to have genuine relevance in the digital era, the concept of public interest must be given clear shape and not merely left open to interpretation by those holding the reins of power. A 2008 study prepared for the World Bank also cites the applicability of Feintuck’s work and notes “the need to revisit and reevaluate the concept of the public interest in broadcasting to suit present circumstances and needs” (Buckley, Duer, Mendel and Ó Siochrú, 2008, p. 9; see also Grainger, 1999).

This concept forms a central pillar of this dissertation: the public interest in broadcasting regulation is not an empty vessel, but must observe Feintuck’s theory of equality of citizenship.

The logical next question is: how does one define “citizenship”? The arguments which equate the public interest with consumer choice (Schultz, 2003; Fowler &

Brenner, 1982) are deeply unsatisfying.2 The consumer is by definition restricted to

2 In a 1999 article in the California Law Review, Cass Sunstein strongly disagrees with the consumer- based approach and offers a comprehensive legal analysis on how broadcasting regulation is used by

one end in the process of information production; the citizen is a far more active

position. In a 2007 article in Discourse and Communication, Sonia Livingstone,

Peter Lunt and Laura Miller chronicle the struggle for language in the UK 2003

Communications Act, between advocates of “consumer” and those who lobbied for

“citizen”, eventually settling for the compromise of “citizen-consumer” (Livingstone

et al, 2005). The consumer is making a consumption choice in the marketplace; the

citizen is taking part in a democratic dialogue and requires information to become an

active participant in the public realm. One is, in essence, shopping, while the other

inherits the Kantian tradition of rational agency. As T.H. Marshall notes in his

famous essay Citizenship and Social Class, citizenship may be viewed as

…a claim to be admitted to the social heritage, which in turn means a claim to

be accepted as full members of the society, that is, as citizens.

…there is a kind of basic human equality associated with the concept of full

membership in a community…of citizenship. (Marshall, 1950, p. 8)

This approach need not be viewed as anti-industry, as is often the perception of

advocates of the public role of media (see Fowler and Brenner). There is room for

entertainment in broadcasting which serves the citizenry; however, it is hard to argue

that American Idol and Dancing With the Stars, even though they have high ratings,

should be regarded as “the public interest”, as per the theory advanced by Fowler.

Again Marshall: “citizenship is a status bestowed on those who are full members of a

citizens “to promote a political culture that is consistent with its own highest aspirations” (p. 564). See also FCC Notice of Inquiry, 1999, Separate Statement of Commissioner Gloria Tristani, for a list of nine essential principles regarding the public interest in broadcasting.

community” (Marshall, p.28). This offers a clear tie to Feintuck who argues that the public interest is served by recognizing the inherent equality between citizens (full

members) in the democratic tradition (Feintuck, 2004, p. 27). Given the strong link

between citizenship and democracy, the “community” in reference can be seen as the

local and national, places where the individual has a direct stake in political issues.

Despite the growth in multinational bodies, the national-state remains the only body with true democratic accountability, and therefore legitimacy.

So how do such lofty ideals as citizenship and democracy apply specifically to the

political arena of broadcasting regulation? In The Media and Democracy, John

Keane expresses the classic argument:

Democracy requires informed citizens. Their capacity to produce intelligent

agreements by democratic means can be nurtured only when they enjoy equal

and open access to diverse sources of opinion. (Keane, 1991, p. 176)

This democratic imperative underlies much of the essential basis of broadcasting

policy, which does not fluctuate with the switch to a digital environment. Darin

Barney observes, “Communications policy is something of a litmus test for

democratic politics in Canada” (Barney, 2005, p. 25). The CRTC recognizes this

dilemma and expressed it clearly in the 2006 study The Future Environment Facing

the Canadian Broadcasting System:

Perhaps the biggest – and an ever increasing – challenge for policy makers,

however, is in balancing the interests of Canadians as consumers and

citizens…It is the role of Government and the regulator to ensure that the

Canadian broadcasting system provides Canadians with the tools they need to

exercise their responsibilities as citizens. (CRTC, 2006, p. 426)

In Canada, all contemporary studies of broadcasting regulation begin and end with

the CRTC. There have been previous studies on the CRTC (Schultz, 1999; Johnson,

1980; Doern, 1997; Hall, 1990; Salter & Odartey-Wellington, 2008), but there is very

little whose primary focus is upon the years since the Broadcasting Act of 1991, and no analysis of the digital television transition, despite the fact it has been over a decade in the making. Such analysis is needed as there has been a marked shift in the

regulatory position of the CRTC in this period. The 1991 Act mandates that the

CRTC regulate “In a flexible manner that…is sensitive to the administrative burden”

(5.2g); hence the emphasis upon light touch regulation. The previous concern that the

CRTC was “out of control” with power (Hall, p. 52) in its first decade and perhaps usurping the legitimate role of government (Schultz, 1999; Perry, 1970; Janisch,

1979; Morrison, Insight Information Inc, 1996) has since given way to theories that the CRTC has become captured by the very industries it is required to supervise

(Hoffmann-Riem, 1996; Fraser, 1999; Doern and Phidd, 1992; Raboy 1990; Hardin,

1985).3 Regulatory capture is not a recent development. The theory of regulatory

capture implies the regulator systematically favours the private interest over public

3 Raboy continues to be a frequent critic of the CRTC: in the 2005 Graham Spry lecture he notes the regulator’s “exasperating decisions over the years” (in the same speech he also applauds the 2004 decision to refuse the license renewal of CHOI fm) and in a 2008 essay, co-authored with Genevieve Bonin, accuses the CRTC of “blindly approving every mega-merger placed before it” (61).

interest objectives (Horwitz, 1989). There is always this danger, as noted by famed

economist John Kenneth Galbraith in The Great Crash 1929:

Regulatory bodies, like the people who comprise them, have a marked life

cycle. In youth they are vigorous, aggressive, evangelistic, and even

intolerant. Later they mellow, and in old age – after a matter of ten or fifteen

years – they become, with some exceptions, either an arm of the industry they

are regulating or senile. (Galbraith, 1997, p. 166; see also Stigler, 1975; and

Bernstein, 1955)

Despite the claims of some critics, the rise of the private sector by no means implies senility at the CRTC, for such has been the experience in most of the Western World since the 1980s. The impact has been most acute in Europe, where public broadcasting monopolies which had stood for decades found themselves in competition with a growing private sector. Like all aspects of governing, broadcasting is prone to ideological shifts and there is a possibility the regulatory pendulum will swing yet again. A key moment in European broadcasting liberalization was France’s

1987 decision to privatize its flagship public broadcaster TF1. It is telling that in the ensuing 20 years, this drastic move has not been emulated by other key European players such as Germany and the UK (Gibbons and Humphreys, 2008). Outside the realm of broadcasting, 2008 has seen calls for re-regulation in the U.S. private financial sector (the spiritual homeland of free markets) after the disastrous lending ventures which have wreaked havoc on the U.S. economy. The United States

government bailout funding for major financial institutions in 2008 is clearly a far cry

from laissez-faire economics.

A society reproduces itself and maintains a sense of social cohesion via regulation

(Boyer, p. 79). “Regulation” derives from regular which can trace its roots from the

Lower Latin “regularis”, meaning "continuing rules for guidance" and from the

Proto-Indo-European *reg- "move in a straight line" (Online Etymology Dictionary: http://www.etymonline.com/index.php). The contemporary sense of political

regulation, as government reach into private enterprise, harkens to the Railways Act

of 1844 in Britain (McLean and McMillan, 2003). This was largely the result of the

accepted idea that railways were a natural monopoly – they did not fit into the realm

of traditional economics (multiple competitors were not feasible) – so the self

equilibrating market was not an option. As will be further developed in chapter two,

there is a strong argument that traditional liberal economic approaches are not an

appropriate fit for broadcasting either – a point being increasingly heard from both

private broadcasters and public service advocates.

As Schultz and Alexandroff observe, it is a mistake to think of regulation as the

natural antagonist of the corporate sector. True, regulation can certainly assume a

policing role for markets, which by definition limits the range of options, but it also

has the potential to plan and promote in ways which can enhance and protect the

position of market players (the “three p’s” as noted by Schultz and Alexandroff,

1985, p. 6). In this sense, it is not regulation per se which is of concern, but how that regulation is utilized by public authorities. Who benefits from the regulatory

structure? For the purposes of this dissertation and in accordance with the policy

outlined in the 1991 Broadcasting Act: is the regulation of the digital television

transition defending the public interest in Canada?

The perception of a regulator as being by its very nature an oppressive and anti-

market institution now seems a dated product of the Thatcher-Reagan era and flies in

the face of 30 years of steady economic liberalization of communication systems

around the world; likewise, much of the scholarship in the critical Marxist tradition

which struggled valiantly in the defence of broadcasting as a fundamentally public institution (Canadian political economist Dallas Smythe, 1982, and philosopher

George Grant, 2000, come to mind) must recognize the current reality that the public

sector has seen its influence wane across the world and whatever the future structure of broadcasting, the private sector will play a role. The goal of critical academic work must be to maintain a clear focus on fundamental policy objectives, not to

adhere to entrenched orthodoxy.

This dissertation situates itself clearly within the field of political economy of

communication in the Canadian tradition of Dallas Smythe, Harold Innis, Vincent

Mosco, and Robert Babe. As noted by more than one theorist, the field of political

economy is broad, but can generally be broken into three distinct strands:

1) Classical liberal, including such foundational authors as Adam Smith, John Stuart

Mill, David Ricardo and Robert Malthus. The market is seen as essentially neutral

and self-balancing. This concept was challenged by economists such as John

Maynard Keynes and John Kenneth Galbraith in the post-WWII era but revived and revised to great effect by neo-liberal economists such as Milton Friedman and F.A.

Hayek.

2) Marxist, where the influential writings of Karl Marx envision an overarching class struggle, reduce the role of state to that of a bourgeois tool, and the general public’s interpretive abilities as that of a false consciousness. Diverse writers such as members of the Frankfurt School and Nicholas Garnham clearly incorporate Marxist doctrine in their work.

3) Institutional political economy, in which the organizational structure plays a fundamental role in resource allocation and conflicts are not necessarily class-based.

(Babe, 1995; Mosco, 1996) This dissertation is in the tradition of institutional political economy. Contemporary realities in the process of cultural production challenge classic liberal political economy’s assumption of an idealized relationship of exchange; indeed, such an approach is always suspect in the field of communications. And while this dissertation shares much of Marxist political economy’s emphasis upon justice and the production process, and does not deny the persistency of class-based issues in the broadcasting system, one must also recognize the role of the state beyond merely reinforcing the status quo. The contemporary reality is more complex than the orthodox Marxist belief of the state as the protector of industrial interests. A more useful approach to the role of government comes from

Sylvia Harvey, who uses the metaphor of a muddy soccer pitch involving “various

forces and interests, sometimes winning, sometimes losing” (Harvey in Calabrese &

Sparks Ed, p. 196). The ‘pitch’ of the CRTC (the dominant site of the Canadian state involvement in broadcasting) has been witness to some exhaustive matches over the years, where, at times, both the corporate sector and the Canadian citizenship have been able to claim victory.

Institutionalists, Canadian political economist Robert Babe observes, “tend to be absorbed in the woof and warp of concrete reality of the present as it unfolds historically” (Babe, 1995, p. 75). A modern political economy analysis of the

Canadian broadcasting system must observe that the organizational structures and bureaucratic activity are potent forces in the production and distribution of goods and services. It is within these bureaucratic structures where the citizen may find a voice.

The results of these struggles, while recognizing the advantage of well-financed and politically-connected business lobbyists, are not preordained. The forces of global capital are obviously a powerful determining force, but as David Harvey notes in A

Brief History of Neoliberalism:

Some attention must be paid to contextual conditions and institutional

arrangements, since these vary greatly from Singapore to Mexico,

Mozambique, Sweden, and Britain, and the ease of conversion to

neoliberalism has varied as a consequence. (Harvey, 2007, p. 116)

Canadian scholars must resist a reflexive approach which calls for drastic overhauls after a single regulatory decision with which one has disagreement (for an example of

this see Boin, 2007). One of the problems encountered by academics trying to gain voice in the policy process is that too often their positions are seen as predictable by policy-making officials. The dissenting opinion in Our Cultural Sovereignty by

Reform Party MP Jim Abbott noted that the academic advisors Marc Raboy and

David Taras

…hold well-known views about the CBC and its place in Canada’s

broadcasting system. As a result, many parts of Our Cultural Sovereignty are

simply a more complex extension of aspects of the status quo. (Canada, 2003,

p. 844)

In a personal interview with former CRTC commissioner Richard French, he also expressed concerns regarding the “predictability” of much academic work; likewise former CRTC chair and Astral Media CEO André Bureau observed in an interview,

“We have to live in the market we are in, and at some point you have to realize we can’t do all of these things that guys from universities believe in” (André Bureau, personal interview, August 18, 2008). Academic study in communications policy will have to offer new insights to remain relevant amid the voices calling for attention in the policy arena.

For much of Europe, the rise of the private sector has only occurred since the 1980s; in Canada, this is not a sudden phenomenon. The role of the private sector within the greater Canadian system was recognized by the 1951 Massey Commission, the 1957

Fowler Commission, and finally in law in the Broadcasting Act of 1958 (Peers,

1979). Public service advocates often have difficulty accommodating the

entertainment factor in communications - the bread and butter of the private sector,

contemptibly dismissed as the “free lunch” by Dallas Smythe (Smythe, 1982). The

commendable efforts of post-war scholars such as Smythe and Herbert Schiller must

now be viewed as an old paradigm.

although no distinctive new model has yet emerged, it is not too early to speak

of the post war public service policy as an ‘old paradigm’ since it has retreated

on so many fronts and been extensively adapted (Van Cuilenburg and

McQuail, p. 198).

This should by no means be read as saying public service broadcasting itself is in a

crisis of legitimacy. As noted by the McKinsey Group in 1999, public broadcasting remains as essential, or more so, than ever before (Blake, Lovegrove, Pryde and

Strauss, 1999); however, if scholars indeed have a role to play, their studies must

recognize the paradigm shift of recent decades and re-examine whether public service

objectives can be accommodated by private sector participants. The Canadian system

has always accommodated a private/public split. This argument is beyond the scope of this essay, and is only mentioned here to note that many of the entrenched lines of the regulation debate need to account for certain contemporary realities.

ii) The New Railway

In Canada, early in this new millennium, a communications infrastructure pieced

together over a century finds itself on very shaky footing. Many countries today face

similar dilemmas but few have put as much time and energy into designing their communications landscape as Canada. From Marconi’s first trans-Atlantic radio signal in 1901 from England to St. John’s, to becoming the most cabled country in the world, and launching the first national communication satellite, Canada has had a prominent international role in media development. These contributions to the evolution of communications infrastructure were matched by leading advances in the politics accompanying the technology. The main impetus for much of Canada’s national media development has been the omnipresence of the most powerful broadcasting centre in the world, the United States, less than two hours drive to the south of most of the main urban centres. It became apparent early that if Canada was indeed to have a unique voice in mass communication, it would require extensive market intervention via public broadcasting and regulation, as opposed to the market- based approach of its southern neighbour.

For nearly a century, the combined elements of geographic expanse, dual official languages (and later multiculturalism), a public/private mixed system, and proximity to U.S. broadcast signals have positioned Canada as a global leader in national broadcasting policy. Outside of the hockey rink, one would be hard pressed to find a space where Canada has occupied such a prominent position upon the world stage.

When evaluating the development of satellite-based communications networks in

Europe and the loss of public monopolies in most nations in favour of a mixed

public/private system in the 1980s, UK scholar Richard Collins wrote that the

European experience was becoming “Canadianized” (Collins, 1995; see also Raboy,

1994; Herman, McChesney and Waterman, 1997; Canada, 1986). In essence this meant that the Atlantic Ocean no longer sheltered Europe from American radio and television signals, and hitherto public broadcasting monopolies would have to learn to co-exist with the private sector.

The common metaphor for the Canadian communications system is that of the modern railroad: a technical and economic infrastructure designed to forge east-west bonds against the seemingly stronger north-south attraction (Raboy, 1990; Stewart &

Hull, 1994). Just as trains later faced competition from trucks and airlines not anchored to the soil of any one nation, so the communications network must accept and adapt to the new reality of satellites and internet connections offering global media reception and transmission possibilities. It is not just communications technology forcing the hand of policy - the traditional Canadian paradigm of communications as a nation-building enterprise also finds itself at a crossroads

(Doern, Hill, Prince and Schultz, 1999). The digital television transition is a moment which allows for a reassessment of these ideals – this powerful medium is undergoing the most substantial upheaval in its fifty year broadcasting history.

For most of us, our greater sense of ourselves as part of a family, a community, a nation, and world citizen is not the same as previous generations have known. While many of the early principles of the Canadian broadcasting system remain valid, they

were also clearly written at a time when Canada was still taking baby steps on the road to true independent nationhood. Shortly after the passing of the 1932 Radio

Broadcasting Act, Prime Minister R.B. Bennett remarked to passionate public broadcasting advocate Graham Spry: “It may well be, Graham, that you have saved

Canada for the British Commonwealth” (Nash, p. 87) It is difficult to imagine such a comment being made today by any politician.

The current Canadian system has adapted to change and has finally officially recognized the place of First Nations peoples and the changing ethnicity of Canada’s population within the 1991 Broadcasting Act (3d, iii). The current Broadcasting Act places much less emphasis on the promotion of a singular conception of national unity than its 1968 predecessor, which called upon broadcasting to “safeguard, enrich and strengthen the nation from sea to sea” (Canada, 1968). Despite the best intentions of Graham Spry, a nationalistic approach which tried to impose a sense of collective identity was always doomed in a country as fragmented and increasingly cosmopolitan as Canada. Arjun Appadurai’s aphorism: “One man’s imagined community is another man’s political prison” has relevance to modern broadcasting

(1990, p. 6). The exponential growth of channels in a digital broadcasting system presents a serious challenge to previously held notions of television contributing to the

“cultural cohesion” of a nation (Negrine, 1994).

While recognizing the strong ties between the two, the primary focus for this dissertation is political, not cultural. Shalini Venturelli notes that communication

policy is “at the heart of modernity’s promise of freedom as citizenship rights in

knowledge and participation” (Venturelli, 1998, p. 29). Challenges currently facing

communication policy are symptomatic of the greater questions of the continued

relevance of the nation-state, and indeed democracy itself, in a digitalized global

economy. Sandra Braman shares these concerns in her 2006 book Change of State:

Information, Policy and Power, where she argues “The most important definition of

information from a policy-making perspective acknowledges its fundamental role as a

constitutive force in society” (Braman, 2006, p. 19). Constitutive forces, she argues,

“have an empirical effect” which may or may not bring society closer to

constitutional ideals but addresses the greatest number of concerns; as opposed to

treating information as a commodity which works to the advantage of a relative few

(p. 21). The regulation of such a force is made increasingly complex in Canada by

the often oppositional pulls of industry, culture and citizenry. In the Canadian

context, industry must co-exist alongside a public funded body (the CBC), the

representation of culture can appear forced or imposed given the increasingly

heterogeneous population, and the needs of citizenry prove notoriously difficult to

pinpoint.

In the midst of this technical, economic and political turbulence stand national communications regulators. Monroe Price observes, “…every country, even one committed to free speech principles, is engaged of some form of regulation or restriction relating to media” (Price, 2002, p. 238). Worldwide, arm’s length regulatory bodies such as the United States’ Federal Communications Commission

(FCC), the UK’s Office of Communication (Ofcom) and Canada’s CRTC have been

assigned the formidable task of bringing order to a fractured, morphing system. They

are charged with protecting the public good while simultaneously creating a

predictable and vibrant playing field for the private sector. As noted by UK

economist Colin Rowat, “Regulators have always faced the problem of regulating for

a future that does not yet exist, but that future is upon them much more quickly than it

has been in the past” (in Von Hagan and Seabright Eds, p. 11). Since 1920, six

different authorities have been charged with regulating broadcasting in Canada: the

Ministry of Marine and Fisheries (1920-1932), the Canadian Radio Broadcasting

Commission (1932-1936), the Canadian Broadcasting Corporation (1936- 1958), the

Board of Broadcast Governors (1958- 1968), the Canadian Radio-Television

Commission (1968 – 1976) and the Canadian Radio-Television and

Telecommunications Commission (1976 – present).

Monroe Price (2002) and Jürgen Habermas (2001) each have invoked the metaphor of

“constellations” to describe the new power structure challenging traditional notions of

national sovereignty. Constellations are not any one thing: they are collections of

stars, planets, and systems, which combined form an altogether new shape – they are

individual pieces of a greater whole. They also contain contributions from old fading

stars. Is the previous state-centered approach to regulation indeed a fading star that

must yield to the demands of greater consumer choice and increased roles for both industry and civil society? In his 2003 analysis of the Canadian regulatory structure,

Richard Schultz states that “the only definite conclusion is that ‘command and

control’, for too long the preferred alternative, is largely, if not completely,

undermined as the primary tool for the attainment of Canadian communications policy” (2003, p. 46). The extent of the CRTC’s traditional ability to command and control is debatable – one could argue broadcasting policy formulation has always been a more inclusive process than this statement would have you believe - however, while Schultz’s view implies that the traditional regulatory ‘tool’ of the CRTC itself may be in need of refitting, policy objectives will remain and must be addressed.

This dissertation examines CRTC efforts to retool regulation in the digital television transition.

The digital era, with its exponentially expanded capacity to accommodate new broadcasting undertakings, has challenged, if not debunked, the long-held belief that broadcasting regulation is required to manage the limited number of radio and television frequencies. Spectrum scarcity, noted one American study, “has always been the underlying raison d’être for broadcast regulation” (Krasnow and Longly, p.

19). The narrower bandwidth requirement of digital transmission has resulted in a freeing up of space on the spectrum, allowing for the sale of telecom spectrum frequencies at government auction in Canada and elsewhere. This would seem to imply less need for government oversight in the sector; however, particularly in

Canada, there was always more to broadcasting regulation than mere traffic control.

The Aird Report, the 1929 Royal Commission on Radio Broadcasting’s pioneering study, specified the public nature of the airwaves and called for the management of the spectrum to be placed under government trusteeship, but went much further. The

most significant point in this first study on the Canadian broadcasting system was that

broadcasting was to be viewed as a public service.

…broadcasting will undoubtedly become a great force in fostering a national

spirit and interpreting national citizenship…we are impelled to the conclusion

that these interests can be adequately served only by some form of public

ownership, operation and control behind which is the national power and

prestige of the whole public of the Dominion of Canada (Canada, 1929, p. 6).

Does the current regulatory framework for broadcasting in Canada offer a 21st century

interpretation of national citizenship? As noted by Feintuck, there is a clear thread

running between the public interest and citizenship. In his 1999 Graham Spry

Memorial Lecture, Australian scholar Gareth Grainger noted, "After eighty years of broadcasting, the original public interest issues which were seen to be implicit in the use of the broadcasting spectrum remain largely unchanged though our way of expressing them may require some restatement" (Grainger, 1999). If indeed, many of the original issues as expressed in the Aird Report remain valid, how they are to be expressed is a far more complicated issue than this quotation from Grainger would make it seem. Preserving public interest objectives will require creative and far- sighted regulatory reconfiguration. A simple restatement will not suffice.

As the dominant player in Canadian broadcasting, the onus for much of this regulatory revision will rest upon the CRTC. In the public hearings before the

Heritage Committee which preceded the drafting of Our Cultural Sovereignty, it was

noted that “few witnesses voiced praise for the CRTC” (Canada, 2003, p. 588). It is safe to say that at no point in its 40 year history has the CRTC been free of public criticism. In a 1995 speech, then-CRTC chair Keith Spicer observed of his organization: “…somebody has to be the referee and there are not many standing ovations for the referee” (Insight Information Inc., p. 48). Canadian voices from across the political spectrum have called for changes to the CRTC, arguing, for sometimes contradictory reasons, that it is ill-suited to the demands of the current environment (see, for example, The Globe and Mail, June 17, 2005, June 4, 2007;

The National Post, Oct 1, 2005; Canada, 2003). An early speech early in the tenure of current CRTC chair Konrad von Finckenstein also called for a re-evaluation of the

CRTC (von Finckenstein, 2007). Given the relatively short window of McChesney’s current “critical juncture” in media policy, von Finckenstein’s term as Chair of the

CRTC will prove pivotal as Canada enters the era of digital broadcasting.4

iii) The Matter of Broadcasting

This dissertation contends that as mass media broadcasting remains the dominant

information source for the vast majority of the population, it is worthy of special

focus in the field of regulation. The predicted death of mass-market communications,

brought about by the seemingly endless choice of digital media, has simply failed to

materialize… at least for now. International scholars interviewed for this dissertation

unanimously agreed that the death of mass broadcasting has been exaggerated

4 McChesney believes a “critical juncture” lasts “no more than one or two decades” (2007, p. 9).

(Verhulst, June 29, 2007; Tambini, July 6, 2007; Schulz, August 13, 2007). While newer niche-market media (internet, podcasting, satellite radio…) have mushroomed in the last decade and undoubtedly taken audience away from more traditional forms of media, broadcasting maintains much of the mass appeal and influence which set it apart from other less-regulated industries almost a century ago.

The diminishing regime of analogue broadcasting technology is characterized by scarcity of frequencies, distinctive industry sectors, few intermediaries, and linear programming – all of which are reflected in the regulatory structure. Digitalization has initiated a regulatory paradigm shift because it takes data such as alphanumeric text, still and moving pictures, sound, and graphics and translates the data to 0s and 1s or digital bits - these new data are easily stored in large volumes and can be transferred on a common carrier, resulting in an opening of frequencies due to the relatively small space requirements, and allowing for the merging of previously distinct industry distribution sectors (Verhulst, 2002b). Broadcasting, both in digital and analogue formats, continues to be the one-to-many communication structure which differentiated it from more personal one-to-one communication such as telephony. This distinction was clarified in an interview with European communications scholar Stefaan Verhulst:

Broadcasting won’t go away.

…In a push environment this appears to be a traditional broadcasting

environment in which you basically are the receiver of a programming format

and content upon which you don’t have that much control except for

switching off the television. In a pull environment (on demand services, non-

linear services) - in that environment you see a shift to control by the user

which mitigates the need for control by government or control by industry.

(Verhulst, personal interview, June 29, 2007)

While the medium itself may shift (i.e. broadband television) the mass audiences for many of these programs distance them from the niche audiences of “pull” upstarts such as Youtube. In the face of the proliferation of new media options, Statistics

Canada offered the following telling figure analyzing data from 1998-2003: “The average hours per week of television viewing in Canada has not changed in the last five years, hovering around 22 hours per week” (StatsCan, 2005).

There is a clearly pragmatic reason for a regulatory study to concentrate upon broadcasting as opposed to the so-called “new media”: the CRTC decided in 1999 that it would exempt the internet from regulation (CRTC 1999-197), and despite the

CRTC announcement of hearings into this matter in 2009 (CRTC 2008-44), the exemption order stands.5

5 In Our Cultural Sovereignty, 2003, the Standing Committee on Canadian Heritage issued the following statement: It is the CRTC's current practice, however, to review its own exemption orders approximately every five years. This means that the 1999 new media exemption order will be before the CRTC for a complete review in 2004. Given this, the Committee believes that any recommendations made now with respect to new media broadcasting would be premature in light of the planned and specific review in one year's time. (p. 481) No CRTC review was announced until 2008.

Another more pragmatic reason to study broadcasting as a separate entity from media

such as telephony and the internet is that in Canada broadcasting and

telecommunication have traditionally reported to two different policy masters, albeit

in the same regulatory house since 1976. While telephone and internet are also

within the jurisdiction of the CRTC, the telecom division reports to Industry Canada,

and broadcasting is under the auspices of Canadian Heritage. The 2006 Final Report

of the Telecommunications Policy Review Panel observes: “The Commission staff

responsible for broadcasting and telecommunications regulation have largely worked

in separate branches, with little day to day contact” (Canada, 2006, p. 11-12).

Industry and technology may be blurring the lines between telephony and

broadcasting, but at this point their regulatory structures remain distinct.

Of course, one should not ignore the challenges posed by new media; this dissertation

will attempt to assess the scope of the challenges posed by digital television

broadcasting and how new regulatory approaches may prove advantageous to

legitimate industrial concerns (one must recognize the difficulty in separating

legitimate economic concerns from the public position of weakness regularly

employed by media voices in an attempt to curry regulatory favour), while not

abandoning the core values inherent in media policy. Technological convergence has

implications which are only beginning to be understood at the level of regulation.6 A central concern is whether the regulatory regime in a converged system will take the

6 see CRTC 2008-44 - Call for comments on the scope of a future proceeding on Canadian broadcasting in new media

industrial shape of the telecom model or the more public service approach

traditionally associated with broadcasting?

Digital broadcasting has strong implications for radio as well as television, though

this study will focus upon the debate surrounding television. The reason for this

restriction is quite simple: terrestrial digital radio concerns are another study unto

themselves. Unlike television, where Canada has chosen to follow the American lead

in terms of the broadcasting system used, Canada struck a bold solo path in digital

radio technology and it has proven a failure (Dunbar, Leblanc, 2007; O’Neill, 2007).

The roll-out of digital radio in Canada began with the 1995 Transitional Digital Radio

Policy, which committed Canada to what is called L-Band technology, which

reserves frequencies 1452 to 1492 MHz for digital radio broadcasts; as opposed to the

later American plan for In-Band-On-Channel (IBOC) technology which allowed

broadcasters to switch from analogue to digital on the same frequencies. The result

has been a weak adoption rate of digital radio receivers by consumers, a very slow

process of transition by radio broadcasters, and an entire conversion which seems

rudderless.

While there are many legitimate concerns over the progress of digital television in

Canada, they are often for different reasons than the trouble faced by its radio cousin.

This dissertation examines how the technology of digital television broadcasting and the regulatory structure thus far in the transition, challenges many of the regulatory assumptions of the previous analogue regime, including traditional concerns of the public interest.

iv) Policy vs. Regulations

It is important to establish parameters between policy and regulation, and why the

CRTC is granted regulatory authority by the 1991 Broadcasting Act (section five) after the policy objectives of the Canadian system are clearly specified in section three. The CRTC has been accused many times of crossing the threshold from regulator to policy-maker, but often the distinctions are not so obvious. In Rescuing

Regulation, Reza Dibadj refers to regulation as a “murky” concept (Dibadj, 2006, p.

4), and Adie and Thomas note, “definitions of regulation abound” (Adie and Thomas,

1987, p. 329). Richard Schultz provides a succinct definition of regulation as “a state-imposed limitation” (Schultz, 1992, p. 6), but this is insufficient for broadcasting, where what is authorized is equally as important as what is restricted.

The explanation of the concept in the Caplan-Sauvageau Report was not so concise, though more specifically targeted to broadcasting:

Regulation consists of all the rules of conduct that must be followed to

comply with the broadcasting policy set forth in the Act. It includes not only

regulations in the strict sense, but also other forms of commitment, whether

prescribed or voluntary, such as conditions of license which establish the

rights and obligations of the broadcaster, policy statements in which the

CRTC states its policies on certain issues, and rules of behaviour adopted by

the undertakings themselves (self-regulation).

(Canada, 1986, p. 180)

With all due respect to this important study, this definition still does not clarify the split between policy and regulation, as it seems to imply policy statements are

regulation despite the effort of clarification of “regulations in the strict sense”. As

will be further developed in chapter three of this dissertation, policy statements have a

decidedly different purpose than regulations and the impact of regulations has distinct

legal implications. It is significant to note that regulation is meant to flow from

policy, as outlined in the Act; however, it is possible for the CRTC to issue policy

statements provided they adhere to the overriding policy objectives stated in section

three of the Broadcasting Act.

The policy superstructure contained in the Broadcasting Act provides the legal

support and sets policy goals for the entire broadcasting system. Regulations are the

means of getting us there. Our Cultural Sovereignty, a report tabled by the Standing

Committee on Canadian Heritage in 2003, describes the Canadian broadcasting

system as “a complex machine where the breakdown of a single working part can

threaten the functioning of the machine as a whole” (Canada, 2003, p. 5). The

Canadian broadcasting regulator (CRTC) has traditionally been given the sweeping

mandate of overseeing the maintenance of the entire machine. Significant regulatory

grey zones such as the Internet, and the compromised position of sharing authority with the Competition Bureau in matters of ownership concentration, call into question

whether the CRTC currently has the necessary scope and authority to carry out this

mandate.

The revolutionary changes (a strong term, but apt) in broadcasting in the last two decades call not just for a reassessment (as opposed to a dismantling) of current policies, but for a fundamental re-examination of the basis for the role of government in broadcasting.7 It is incumbent to ask: does the current pace of change in the media environment indeed call for a drastic overhaul of the system or is the move toward increasingly light-touch and co-regulation perhaps the product of pressure brought on by market forces in an attempt to seize control of the regulatory agenda? There is no doubt that various industries have strategically over-hyped the digital era at various times to benefit various industrial projects (Fraser, 1999).

An irrefutable (and perhaps irreversible) challenge for media regulation is the increased scope of globalization. While the traditional “public vs. private” debate for the media system still has merit, the new and growing elephant in the policy room is the power of multinational media corporations who increasingly answer to no one particular state. This is not to say the nation state is insignificant – Monroe Price clearly demonstrates how the new international broadcasting environment is filtered through the responses of individual nations (Price, 2002, p. 234). A key element in contemporary media policy is situating the role of the state vis-à-vis international market pressures.

7 Our Cultural Sovereignty states, “the Canadian broadcasting system is… at the single biggest revolution in its history” (Canada, 2003, p.428).

v) Methodology:

This study will use the approach of institutional political economy, focusing upon the changing role of government, and in particular the CRTC, in the digital television transition (roughly 1995-2008). There is little doubt that governance structure of

broadcasting has evolved, widening the field of participants, and that regulation has

been eased or lifted in some cases; however, the CRTC remains the most powerful

institution in Canadian broadcasting. To grasp the changing power structure in

Canadian broadcasting, it will be necessary to study both the position statements and decisions of the federal regulator, as well as the submissions and studies of various actors in the broadcasting policy arena. To carry out this analysis, this dissertation

will make use of the extensive documentary literature produced by the CRTC itself,

as well as external studies, public hearing submissions and testimony, and interviews

with policy scholars, private sector representatives, and CRTC officials. The central evidence for the chapters on policy and regulations (chapters three and four) are the public notices, decisions, and statements by the CRTC released to the public via its website (www.crtc.ca). Each reference to a CRTC notice will cite the specific

number as it appears on the CRTC website.

At its essence, this dissertation will be true to the original vision, if not the specific

methodology, of Chicago School sociologist and policy studies pioneer Harold

Lasswell, who viewed the field of policy analysis as a “policy science of democracy”

(Fischer, p.2; Hajer & Wagenaar, p. 110). Lasswell was an advocate of a rigorous

empirical foundation for policy studies, largely influenced by the rigidly positivist

approaches of economics and the natural sciences. He saw academia as offering a

unique vantage point in the policy struggle, detached and above the fray, and

therefore positioned to cut to the essence of the debate. However, critics like Frank

Fischer have written that early policy studies failed to deliver on its initial promise

and offers little by way of a lasting legacy (in Hajer & Wagenaar, p. 209; and Fischer,

p. 9). The strictly empirical methodology employed by policy analysts like Lasswell

had difficulty accounting for the power dynamics at play within the policy arena.

This dissertation will be faithful to Lasswell’s vision of academia’s detached vantage

point and make use of industry and public data, but recognizes some of the inherent

shortcomings in employing a strictly empirical methodology. In the power dynamics

at play in Canadian broadcasting regulation, the numbers do not always speak for

themselves, but are a constant site of debate.

Later policy theorists, influenced by Foucault and other post-modern thought, have placed greater emphasis upon social construction and the discursive practices of a range of actors not restricted to the centres of state power. The public forum provided by the CRTC makes for an ideal use of analysing the discourse of the various players involved in the policy process - loaded phrases such as “the public interest” cannot be

adequately understood unless one takes into consideration the intentions of the

speaker. As always, normative values play a central role in broadcasting policy –

something difficult to quantifiably measure. Conversely, the danger in applying a

strictly discursive analysis approach is what Frank Fischer calls “the quagmire of

relativism” - a sense that all positions are strictly symbolic.8

Policy analysis must “renew its effort to deliver on Lasswell’s call for a policy

science of democracy by showing how these new interactive practices might actually

fulfill a role in renewing democratic governance in a new modernity”(Hajer, 2003, p.

110). The dissertation is influenced by a post-empirical approach, more specifically

argumentative discourse analysis (ADA) – an approach that has gained recognition in

policy studies in the last decade via the work of Maarten Hajer (2002, 2003) and

Frank Fischer (2003), among others. ADA distances itself from the more linguistic– based approach of Foucauldian discourse analysis by emphasizing the socio-political

practices from which social constructs emerge (Hajer, 2002). While this dissertation

will not explicitly follow the ADA methodology, it is heavily indebted to the work of

Hajer and Fischer.

ADA is based on three interrelated elements: discourse, practices and meaning. ADA

is not simply about analysing arguments, it is much more about analysing politics as a

play of 'positioning' at particular 'sites' of discursive production. A feature of ADA is

that it has a strong empirical focus and seeks to illuminate the variety of mechanisms

at play that produce particular political realities. Discourse refers to a set of concepts

that structure the contributions of a group of participants to a discussion. Instead of

organizing research to facilitate the search for empirical generalizations, the key to

explaining how change comes about has to be grounded in a detailed contextual

8 also referred by Fischer to as “hopeless relativism” in Hajer and Wagenaar Eds, p. 221.

examination of the circumstances at play in specific cases. For this purpose quantitative methods have to take a back seat to qualitative research (Fischer, 2003).

For this dissertation, the discourse surrounding digital television has evolved over more than a decade with power given to certain groups and task forces to set the parameters of the debate. This has had a profound impact at the level of public involvement. These powerful groups were in turn influenced by the greater socio- political practices of the last decades of the 20th century. These greater hegemonic factors touched all corners of power in much of the industrialized world, but are distinctly pronounced in the debate surrounding digital television. Citing the specific policies and regulations surrounding digital television over the last two decades, this dissertation will analyze the discourse and practices of this field and seek to find the larger meaning of the impact of the digital television transition upon the public interest elements in Canadian broadcasting.

vi) Chapter Outline

This dissertation will examine the evolving place of regulation in Canadian broadcasting policy as it relates to digital television in seven chapters.

1) The Roots of Broadcasting Regulation and the CRTC

The first chapter will present a brief history and literature review on the area of broadcasting policy in Canada. It will seek to address the central theoretical question

of why broadcasting has traditionally been viewed as an industry in need of

regulation in Canada and abroad. It will demonstrate how the nature of this regulation

often speaks to the political culture of the nation in question. What is the specificity

and nuance to broadcasting as opposed to other media; in particular, the often strained

relationship between government and regulator? What is the role of communications

in the greater picture of the democratic polity?

This chapter will also offer an historical overview of the CRTC and how it differs

from its regulatory predecessors. It will examine the principles of the 1968

Broadcasting Act which created the CRTC and analyze the ensuing power struggles

as it asserted its new-found authority in the first two decades. Two key sites of the power dynamics between the CRTC and the federal government are also examined: the introduction of pay television and the launch of direct-to-home satellite receivers.

These cases were essential in setting the current regulatory dynamic in Canadian broadcasting.

2) Technology and Neoliberalism

The second chapter will look at what this study perceives as the key contemporary pressures on broadcasting policy in Canada: changing technology and the rise of

neoliberalism. Shifts in technology are a constant struggle for communications

regulators, though the intensity of current changes is unprecedented. In particular, the

regulatory challenges posed by digital television will be discussed. This chapter will

examine the relationship between changing technology and broadcasting regulation.

Just as broadcasting policy originally developed in the welfare state-building era of the 1930s, the current regime has been profoundly influenced by the global movement toward a neo-liberal economic paradigm. It is my view that most communication scholars have not taken the time to address this 19th century economic revivalism on its own terms. This chapter examines the writings of economic theorists such as Adam Smith, Milton Friedman, Friedrich Hayek and John Kenneth

Galbraith and places them in context with the movement to bring market economics to broadcasting.

3) Policy Statements – the Digital Television Transition

This chapter is the first of two which will take a specific look at the work of the

CRTC as it relates to the digital television transition. This chapter will focus on the policy announcements of the CRTC and ask: what does the CRTC believe is the appropriate position of regulation in the current environment? How has the language

from the CRTC changed about itself and what does this reveal about the relation between government, industry and citizens?

After a brief description of the science of digital television, this chapter explores the

early digital television policies of Canada and the United States via a comparative

analysis examining the language, participants, and strategies appropriated by each country. The chapter categorizes the Canadian approach into the CRTC policies

designed for specialty and pay channels, broadcasting distribution undertakings, high

definition, and over-the-air broadcasters.

4) Regulatory decisions

What has the CRTC done in the area of digital television? Does the action taken via specific regulations match the early policy plan? This chapter will examine key

regulatory decisions regarding the digital television transition and place them in

context against the policy statements presented in chapter three. Particular attention

will be paid to license renewals. This chapter will offer the empirical evidence some

critics say is often missing from policy analysis (Napoli, 2001). Is the CRTC living

up to the policy principles stated in chapter three? How do public service criteria

measure at the level of operations?

5) Self and Co-Regulation and the Digital Television Transition

This chapter will place co-regulation in the greater movement surrounding the

changing governance arrangements of Canadian broadcasting policy. It will examine

why establishing a clear, universally applicable definition of co-regulation has proven

difficult. How has the movement to ‘light-touch’ regulation affected the launch of

digital television in Canada?

This chapter will discuss major studies of self and co-regulation both in Canada and

Europe, where there has been a stronger trend to co-regulation. I will seek to identify

historical developments and patterns in regulation and see where co-regulation fits in

a larger policy picture (i.e. is there historical precedent for co-regulation in other

policy realms?)

The launch of the Canadian Broadcast Standards Council (CBSC), a Canadian broadcasting governing body which includes elements of co and self-regulation, is a

significant regulatory development for this project. This chapter will examine the

regulatory concerns as well as the industrial impetus for this endeavour in the late

1980s.

The key bodies examined in this chapter will be the industry groups associated with

launching much of the digital television transition within Canada. What does this say

about the power structure at the core of the digital transition and is it consistent with

traditional views of the public interest?

6) Conclusion

In the digital television transition, has the CRTC, via its regulatory structure, been

attentive to democratic needs of Canadian citizens? Have its actions matched the

rhetoric about the role of regulation? This chapter will offer clear responses to these questions using the analysis of the previous chapters.

The conclusion will also assess the role of co-regulation in the digital television transition. Has the movement toward co-regulation been accomplished in such a way as to provide similar levels of protection for the citizenry? The conclusion will also recommend areas for further work which have arisen as a result of this study.

Chapter One: The Roots of Broadcasting Regulation and the CRTC: History and Theoretical Foundation

Here is a majestic instrument of national unity and national culture. Its potentials are too great, its influence and significance are too vast, to be left to the petty purpose of selling cakes of soap.

(Graham Spry, 1932 in Nash, p. 72)

You’re in the business of selling soap.

(Canwest CEO Izzy Asper, 1991. Speech to journalists for Australian television station, and Canwest property, TV3. In Edge, 2007, p. 52)

In the recent decades, with the rise of the private sector and the diminished fortunes of the national public broadcaster, the soap-sellers have gained a strong foothold within the Canadian system. The CBC, once the pre-eminent broadcaster and regulator (1936-1958) for the system, now finds itself in an annual funding struggle to

meet levels it knew in the 1980s, while the commercial sector it used to regulate has become robust and profitable. Successive appeals for long-term stability for the CBC have fallen on deaf ears, despite changes in power at the federal level (Canada, 1986;

Canada, 2003; Canada, 2006b). A recent study out of the UK comparing the

Canadian system with the UK, France, and Germany claimed the current state of the

CBC has “no clear focus” (Gibbons and Humphrey, 2008, pp. 6-12). As Marc

Raboy notes, this uncertainty stems from the creation of the Board of Broadcast

Governors (predecessor to the CRTC) as an independent regulator in 1958, removing regulatory authority from the CBC. It is this moment when the Conservative government decided “…the primary area of public intervention in broadcasting would henceforth be regulation (as in the U.S.) with programming and operations secondary” (Raboy, 1990, p. 135). The Broadcasting Act of 1958 legitimized the position of the private sector within the Canadian system and indicated that the contestable terrain of the public interest would be determined by the public regulator, not the public broadcaster.

While the CBC continues to struggle, in another reversal of fortune, the Canadian

Association of Broadcasters (CAB), a long-established private broadcaster advocacy group, seems to have reversed its position regarding the role of regulation within the

Canadian system. It appears the soap-sellers have been well-served by the current regime. In an April, 2008 article in the Globe and Mail, CAB chair Glenn O’Farrell writes:

Canada's system of broadcast regulation is an example of how the system can

work…Until now, the system has been modernized thoughtfully, inspired by

democratic values, in recognition of the ever-present need to give voice to

Canadians. Shifting to a model of unchecked market forces could very well

put much or all of it at risk, without any indication Canadians, as citizens, or

as consumers, will reap any enduring benefit (O’Farrell, 2008).

This is a drastic shift vis-à-vis regulation coming from an organization which, following the release of the Fowler Report in 1965, which set the framework for the creation of the CRTC, published articles and editorials in its journal Canadian

Broadcaster calling the report’s recommendation of a new national regulator

“dangerous” and paramount to “dictatorship and censorship” (in Bird ed., pp. 352-

353). Obviously in the ensuing decades, Schultz and Alexandroff’s observation that regulation can promote and protect, as well as police, has suited the needs of

Canadian private industry. The previous calls from industry demanding deregulation are starting to sound as dated as the belief that broadcasting will protect Canadians as citizens of the British Empire. The underlying question is of course, to what purpose does the private broadcasting industry believe regulation is useful and are decisions regarding the digital television transition truly “inspired by democratic values”? Are these decisions compatible with Feintuck’s definition of the public interest?

This question is by no means unique to the Canadian experience: international scholars have asked if the shift to lighter forms of regulation and an expanded role for

private industry can be accomplished without compromising core democratic values.

According to Shalini Venturelli, the early stages of multinational broadcasting

governance in Europe in the 1980s were great benefit for “proprietary-enlargement

policies” but did little for “communication structures for collective deliberation and the maintenance of political life” (Venturelli, 1998, pp. 244-245). Essential elements

regarding media as a central component of the public sphere are again called into

question. Does the system respond to public needs as well as wants? It is relatively

easy to promote the protection of national cultural industries (a perhaps over-

emphasized point on the European agenda and a common refrain in Canadian policy

circles), but securing democratic inclusiveness in a necessary public sphere is a much

trickier proposition - as Venturelli states: “a cultural argument for public space is not

necessarily a democratic one” (Venturelli, 1998, p. 196; also Barney, 2005). The

Canadian broadcasting industry is obviously feeling well-served by the current

regulatory structure, but can the same be said of the public interest?

There is no doubt that the regulatory approach of the CRTC has shifted since its

inception in 1968, followed by a period of aggressive activity in the 1970s. This

chapter will examine the theoretical roots of broadcasting regulation as well as the

development of the CRTC as a regulatory body within Canada.

1.1 The Roots of Regulation

It is helpful to shed historical perspective into the often deliberately clouded history surrounding broadcasting regulation. There is no overarching consensus as to why broadcasting has traditionally been deemed ripe for regulation, whereas print media has always enjoyed a fiercely defended distance from the state. Freedom of the press is specifically enshrined in the constitutions of countries such as the United States and

Italy but there is no reference to newer forms of media. In the U.S., disputes concerning broadcasting are usually challenged under freedom of the press law and resolved in the courts. The German constitution and the Canadian Charter of Rights and Freedoms are clearer in their support of broadcasting freedoms. Section 2.b of the

Canadian Charter states:

Everyone has the following fundamental freedoms: ... freedom of thought,

belief, opinion and expression, including freedom of the press and other

media of communication (italics added).

There is a long-established link between a free press and a functioning democracy, but how one determines the parameters of “free” is contestable. Given the public nature of broadcasting, there is a constant struggle to establish priority between the need for economic independence for the commercial sector (where there is not a public monopoly) and public responsibilities of all broadcasters. Regulation can be a necessary tool to preserve essential freedoms and establish clear rules for economic players. Scholars agree that the absence of regulation is regulation by another name - it merely substitutes the regulation by the people, via an independent authority named by their government representatives, for the regulation of the market (O’Siochru and

Girard, 2002; van Cuilenburg and McQuail, 2003; Craufurd-Smith, 1996). Or as

Garnham (who in turn credits Gellner) puts it: a shift from rule by the hangman to

rule by organized bribery (Garnham, 2000a, p. 27).

So what are the characteristics of broadcasting which require a separate regulatory

structure than industry built around the printed word? Several critics challenge the

established liberal notion that an unregulated printed press has historically benefited a

free and informed citizenry. Seminal Canadian communications scholar Dallas

Smythe is typically forthright in his assessment, dismissing any texts which celebrate the growth of the ‘free’ press as “romantic, turgid pap” (Smythe, 1981, p. 70). This belief that the print media has failed to offer true public service forms the basis for a validation for broadcasting regulation proposed by Goldberg, Prosser and Verhulst

who argue a regulated broadcasting sector can help balance the inherent problems of

an unregulated press. According to these authors,

…regulation may be needed simply to ensure that the media landscape does

not become too uniform and to guarantee access somewhere (their italics) in

the media to a range of different viewpoints.

(Goldberg, Prosser and Verhulst, 1998, p. 300)

Nicholas Garnham believes we are “trapped” in a nineteenth century view of the

press because “no equally legitimated theory has been developed to handle the

dominant form of public communication, broadcasting” (in Calhoun ed., 1992, p.

363).

At the core of this debate rests the notion of an informed public, and in particular the communication process required to achieve popular opinion. In the post-war era, the

most famous advocate for the role of citizen debate in the democratic process is

German political philosopher Jürgen Habermas. Public opinion, according to

Habermas, is only truly representative of the greater society when “exposed to

correction within the framework of a critically debating public” (Habermas, 1999, p.

221). Habermas expresses concern with the intrusion of the previously private realm

of finance into the public zone of political debate.

According to the liberal model of the public sphere, the institutions of the public engaged in rational-critical debate were protected from interference by public authority by virtue of their being in the hands of private people. To the extent that they were commercialized and underwent economic, technological, and organizational concentration, however, they have turned during the last hundred years into complexes of societal power, so that precisely their remaining in private hands in many ways threatened the critical foundations of public institutions. (Habermas,

1999)

The liberal ideal of keeping the public sphere in the hands of private citizens may

have seemed logical for the period of classical liberalism, but the power now held by

newer forms of media threatens its democratic potential. Habermas’ notion of the

equal voice of all participants in the public sphere, strikes a parallel with Feintuck’s

observation of a key pillar in the public good and democracy: equality as a central element within the democratic system.

There have been numerous criticisms of Habermas since The Structural

Transformation of the Public Sphere was translated to English in the late 1980s, and there is no doubt that the theory is not without flaws. Chief among them: omitting the potential of multiple publics and identity politics; his clear split between home and the public sphere meant gender relations were unaccounted for; and the need for compromise in decision making (Garnham in Calhoun ed., 1992). However,

Garnham is correct in his observation that these shortcomings do not diminish the significance of Habermas’ theory of the public sphere and its observations of communications and representative democracy in the contemporary world (ibid, p.

364). The role of regulation in broadcasting is in constant need of retooling because it continually straddles the line between the private (it is often consumed in the home) and the public realm.

E.M. Barendt’s significant 1993 book, Broadcasting Law: A Comparative Study, analyzes the legal issues surrounding the print/broadcasting split and reaches the following bold and controversial conclusion: “There is therefore no convincing explanation for the regulation of the broadcasting media in contrast to the liberal regime enjoyed by the press” (Barendt, 1993, p. 9). Barendt dismisses the legal argument of regulation in the United States as a means to achieve true pluralism as

“clumsy” and believes the regulatory dichotomy between broadcasting and press is

largely based upon historical precedent and not justifiable legal constructs (ibid, p.9).

Essentially, Barendt argues that print and broadcasting should either each face regulation or neither one of them should be regulated – a clear contradiction to the approach of the last century. Broadcasting Law cites the FCC vs. Pacifica case of

1978 which ruled that regulation was justified as broadcasting signals “intrude into

the home, are more pervasive, and are more difficult to control than print media”

(Barendt, p. 6).9 Barendt refutes this argument noting broadcasting does not intrude

in the home unless listeners and viewers want it to. The idea of offensive images intruding within the home was recently reinforced in the U.S. by Janet Jackson’s infamous “wardrobe malfunction” at the Superbowl, which resulted in new regulations from the FCC calling for increased fines for broadcasting harmful content

(Siegel, 2008, p. 514). Despite Barendt’s conclusions, broadcasting remains a unique space of regulation.

A key historical split between policies for media as opposed to print have to do with exposure to offensive or, in the case of children, potentially harmful content. This idea of the intrusiveness of broadcasting is also a key component to work by

European scholars Damian Tambini and Stefaan Verhulst, who identify the distinguishing features of broadcasting content as pervasiveness, invasiveness, publicness, and influence (Tambini and Verhulst, 2000; Verhulst, 2002).

Pervasiveness is largely the result of the limited space on the broadcast spectrum

under the analogue model, where the broadcasters were given access to a scarce

9 This case was spurred by a New York radio broadcast of comedian George Carlin’s Dirty Words – a comedy routine which questions why some words are deemed unfit for broadcasting.

resource and the public had few “opting out” possibilities. This justified public

service obligations placed upon broadcasters.

Invasiveness is exemplified in the objections to content which is not actively chosen.

The individual does not control the images offered by broadcasters – the broadcaster

“invades” the home. The Janet Jackson incident is a clear case in point.

Publicness is related to social norms and the role of media in political and cultural debates. Even in a liberal, relatively open Western society, there are still social

taboos – violent and sexual image involving children are a current concern. These

topics are considered unfit for the public domain. The flip side of this argument is

that there are certain political issues and cultural products which are deemed essential

to the general good. Broadcasting is a bridge between the private life within the

home and the benefit of the greater community, or public. In this case the broadcaster

has a responsibility which comes with a license, to provide information for the greater

public sphere.

The influence of the media has been debated since the first radio broadcasts (see

Couldry, Livingston and Markham, 2007). In the limited space of the analogue

environment, the impact of individual broadcasters has traditionally been much

greater. It is this idea of broadcasters as agenda-setters which formed the basis for the

famous 1988 book by Herman and Chomsky, Manufacturing Consent.

As Verhulst observes, digitalization “challenges these justifications” to such a degree

that all four “decrease or even disappear” (Verhulst, 2002a, p. 437; see also Schultz,

1992). The sheer abundance of options in a digital environment largely negates much

of the rationale behind the challenge of invasiveness and pervasiveness, and an

argument can be made that digitalization has increased the amount of information available to the public (this is debatable given present ownership concentrations) and

thus challenges the power of the previous agenda-setters.10 This fundamental shift is

one of the key reasons regulation is in need of reassessment, but that is a far cry from saying the reasons for regulation no longer exist. The challenge for regulators is to recognize overall policy objectives and to respond with appropriate regulation in this new environment. Academics, governments and industry need to recognize that effective regulation requires renewal and that focus must remain on policy objectives, not the means of achievement (Dunbar & Leblanc; Canada, 2004).

This dissertation disagrees with the following statement from the 1965 Fowler

Committee Report: “The only thing that really matters in broadcasting is programme content; all the rest is housekeeping” (Canada, 1965, p. 5). Not all policy objectives are a result of content concerns; in fact, the primary concern over content in Canada has historically not been about harmful or distasteful imagery, the overriding regulatory focus has been to create Canadian options in an American-dominated industry. In a 2008 book on the CRTC, Liora Salter and Felix Odartey-Wellington observe:

10 For further concerns as to the unrealized pluralist potential of new media, see also the The Project for Excellence in Journalism’s The State of the News Media 2008, which concludes “The prospects for user-created content, once thought possibly central to the next era of journalism, for now appear more limited, even among “citizen” sites and blogs”.

What matters to the CRTC are the options that Canadians have available and,

more particularly, whether or not such options include Canadian programs and

services. …The CRTC has no wish to educate viewers and no particular

agenda for what they should see, except inasmuch as the Canadian

broadcasting system contains Canadian programming choices, reflects

diversity and is representative of the Canadian population as a whole.

(Salter & Odartey-Wellington, 2008, p. 112)

Chapter four of this dissertation will examine how concerns over offensive content in

Canada are now left to industry to self-administer, leaving the CRTC to grapple with greater structural issues. If Verhulst is correct (and I believe he is) and digitalization challenges traditional fundamental underpinnings of content regulation in broadcasting, this by no means undermines the place of regulation in the system; indeed, it may help to clarify the true place of the state in the policy process. The opportunity of the current situation is that Canada can move from broadcasting policy justly criticized as defensive by some reviewers (Gibbons and Humphreys, 2008) to one which establishes specific public interest goals, yet shows flexibility in regulation.

Contrary to the statement from the ’65 Fowler Committee, there have always been strong economic-based arguments for the regulation of broadcasting. The essence of this view is that the market left to its own devices fails to provide the necessary public

service requirements in broadcasting; it will simply seek to offer the cheapest product which produces the highest rating, thus generating maximum return on investment.

This theory is commonly known as market failure. This should not be read as a normative judgement of private broadcasters, it is simply the nature of the economic beast. The rationale behind this theory (and its contemporary contestation) will be examined in more detail in chapter two, but for this chapter it is necessary to recognize that a key reason for regulatory oversight in broadcasting has historically been the belief that the market is an imperfect mechanism to deliver a properly functioning broadcasting system. In economic terms, the areas which fall outside the theories of a classic market paradigm are known as “externalities”, which may be both positive (social cohesion, education) and negative (monopoly formation, financial exclusion, similarity of product).

Early radio broadcasting in Canada was allowed to develop in a purely commercial environment, free from any regulatory restrictions, and the results were chaotic. Left to its own, the market delivered radio broadcasts which were prone to frequency interference, filled with advertising, void of Canadian content, and regularly broadcast material offensive to religious and minority groups (Peers, 1969; Nash,

1994). It was this clearly dysfunctional system which resulted in the government commissioning the Aird Report of 1929, which unequivocally called for broadcasting to be placed under government trusteeship. This was a drastically different regulatory approach from the United States, which developed a market-based system, where the privately-owned broadcasters were seen as trustees of the airwaves, which were a

public resource. There is still regulation under the American model, though with far

less concern of market failure than the Canadian and European structures.

Canada struck a bold and unique path in 1932 by founding a system with a powerful

public broadcaster that still allowed for a commercial sector and the importation of

foreign programming. Marc Raboy describes it as “a hybrid of the British and

American public service and commercial models” (Raboy, 1990, p. 48) The Canadian

system was neither as state-centred as its European counterparts, nor as market-driven

as the American model. The central concern of Canadian policy was, and continues to

be, national sovereignty and control. In 1932, Prime Minister R. B. Bennett stated

First of all, this country must be assured of complete control of broadcasting

from Canadian sources, free from foreign interference or influence.

(from Raboy, 1990, p. 45).

The first policy subclause of the 1991 Broadcasting Act continues this theme:

3. (1) It is hereby declared as the broadcasting policy for Canada that

(a) the Canadian broadcasting system shall be effectively owned and

controlled by Canadians;

Citizens of any country will almost certainly rise to support ideas of sovereignty and control, but the switchover to digital broadcasting is allowing us the moment to ask

the fundamental question: to what purpose?

It seems very unlikely that content issues will be the driving force in new regulation.

The Canadian appetite for American programming has never waned despite decades

of support for Canadian film and television industries. In 1970, Ronald Perry wrote

“Canadian nationalism is the primary aim of government policy on broadcasting”

(Perry, p. 9). Nationalism in the Canadian context (as with any, one could argue) is

fraught with uncertainty and seems a highly shaky concept to act as the guiding principle for future broadcasting policy. Darin Barney writes:

…the spectre of American domination has consistently provided the Canadian

state with reflexive justification for communication policies that either serve

the interests of domestic capitalists, or bolster the apparatus of an artificial

national culture that disguises the cultural complexity of the country’s

inhabitants. (Barney, 2005, p. 79)

Not only is such a drive toward common identity problematic given the increasingly

multi-ethnic nature of most Canadian urban centres (where the vast majority of the

population resides), but as UK scholar Richard Collins convincingly argued in 1990,

Canada lacks

…the centripetal forces of shared national language, common ethnicity,

shared economic interest, natural frontiers, and national history present in the

European nation-states that constitute the normative point of reference in

nationalist discourse (Collins, 1990, p. 135).

Collins emphasizes that this is not a curse but a hope for Canada to stake its own cosmopolitan claim in a world where nationalist paradigms of the previous century seem increasingly tenuous.

The focus upon content in the Canadian context is not as much about spectres of harmful material, nor patriotic breast-beating; it is to make sure Canadian stories are told in an economic environment which would not otherwise provide for them, and to foster the growth of a domestic film and television industry. Content promotion is still a worthwhile enterprise for Canadian regulation – all countries need to tell their stories – but the weakening of traditional concerns of pervasiveness and invasiveness brought on by digitalization, and relatively small audience numbers for Canadian television productions outside of Quebec, make this a poor primary focus for the new era of broadcasting policy.

This is why an emphasis upon democratic principles as guideposts for the new era of broadcasting regulation is a far more practical and worthwhile objective than past concerns of cultural protectionism or potentially harmful content – it can allow regulation to address “bigger picture” issues such as continuing market failure.

Regulatory emphasis must be placed upon the “public good” as defined by Feintuck:

“the values of equality and citizenship within a democracy” (Feintuck, 2004, p. 248).

1.2 Regulation and the Nation-State

…new, higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society itself. (Karl Marx. Preface to “A Contribution to the Critique of Political Economy”)

What rice is to the Japanese, what wine is to the French, regulation is to the Canadians. When any new phenomenon appears on the horizon, whether it's in vitro fertilization or superconductivity, our first response is always the same: how do we regulate this sucker? (Robert Fulford, 1993)

There will be no one-size-fits-all solution to broadcasting regulation in the digital era.

Though many of the problems facing countries will be similar, the reactions will be, and should be, dependent upon certain national priorities. Researchers have warned against a simple regulatory appropriation that does not consider the local context:

Great care should therefore be taken to allow the organic growth of co-

regulatory standards, in harmony with the specificities of individual States; a

mere “cut and- paste” exercise regarding standards and guidelines will be

doomed to failure if it does not take full account of the environment in which

it is intended to operate. (McGonagle, 2002, p. 4)

There are essentially two reasons for this reaction: first, the regulatory tradition developed in the analogue era when it was much easier to see broadcasting as a more localized activity – radio and television transmitters could be regulated to a geographical area, much easier than satellites and internet. The policy structures were designed to reflect local concerns and this continued despite the rise of cable transmissions in the 1970s, which was also regulated to offer local programming.

While the new digital system will call for a substantial shift, there is no need to

completely rewrite all regulatory traditions. The scaffolding is already in place - the

task for regulators is to determine proper adjustments.

The second reason lies in the strong link between broadcasting and democracy:

simply put, the nation state is the political entity with the democratic legitimacy to

speak on behalf of citizens.11 In an era where broadcasting is increasingly global in scope, the tie to the nation-state is increasingly significant, for no such global body exists. There have been debates around the centrality of the federal government’s role in the last century - the Aird Report originally called for more autonomy to the provinces but the British Privy Council ruled in 1932 that broadcasting was a federal jurisdiction. For any nation state to be seen as legitimate, it must be engaged in a dialogue with its own people. For the last century this has been done via broadcasting.

There is historical example that national objectives can co-exist alongside international obligations. While digital transmissions admittedly transcend borders with more ease than in the past, the phenomenon is not without precedent -

international communication agreements have existed since the development of the

telegraph in the late 19th century. Twenty nations signed on to the International

Telegraph Convention in 1865, creating a governing central body (International

Telegraph Union, now the International Telecommunications Union) and an

11 A notable exception to this rule is Germany, where the individual states (Länders) have their own regulatory authority.

agreement on transmissions, the objectives of which remain basically unchanged

today (www.itu/int.net).

In a 2005 speech, Marc Raboy notes,

With broadcasting, a monumental shift took place in the historic relationship

between communication media and the state. Previously, government

intervention, where it occurred, sought to constrain media activity perceived

to be a threat to the security of the state….the establishment of broadcasting as

a consumer medium after the First World War coincided with the birth of the

modern idea that the state could and should be used as a progressive

instrument of intervention for social purposes. (Raboy, 2006)

The examples of telegraphy and the rise of broadcasting demonstrate how trans-

border communications by no means nullify the role of the nation state. The nation

state will play a central part in the new and developing digital broadcasting

environment; in fact this critical juncture may offer the state to play a more

progressive social role (McChesney, 2007).

Canada has historically chosen a unique broadcasting path to suit its particular values and political requirements and there is no reason to believe the digital era will bring

about regulatory uniformity between nations. Québec scholar Pierre Trudel writes,

“(t)he legislative provisions that States adopt are not the result of chance. They reflect

the cultural features of various human societies” (Trudel, 2006, p. 136). Canada and

the United States share a great deal in common, but many of the differences between them are apparent in their respective broadcasting regulation histories. The U.S. model reflects concerns of privacy, the economic necessities of a well-managed system (it was broadcasters who had requested regulation in the early 1920s) and content concerns (Huff, 2001). Reasons for establishing regulation, as outlined in

Communication Law in America, include spectrum scarcity, pervasiveness (and implied invasiveness), and protecting children (Siegel, 2008).

As previously noted, content issues have not traditionally been seen as paramount to

Canadian broadcasting policies in the same way they have been a central American concern. The Canadian system was originally conceived in the Broadcasting Act of

1932 to promote the protection of national sovereignty; the extension of broadcasting to all parts of the country; and the notion that the airwaves were a limited national resource which should be exploited as a public monopoly (Ellis, p. 8). The basic principles of the Canadian broadcasting system since the formation of the CRTC in the 1968 Broadcasting Act have maintained much the same focus with the notable changes that the system should be primarily Canadian in its programming and provide employment for Canadian artists, technicians and broadcasters, and the system should be controlled by a single public agency which would provide both national broadcasting service and regulate all private broadcasting enterprises (Ellis, 1979).

Sovereignty, so important in the Canadian context, has never been of explicit importance in the American regulatory structure (with the notable exception of foreign ownership restrictions) - being the unquestioned global leader in

broadcasting content production, and having the population base to amortize investment even before hitting the hungry international market, tends to ease the regulatory burden.

Current media concerns are reflected at the local (most radio remains localized), national (most television networks are national), supranational (the European

Broadcasting Union) and international levels (Rupert Murdoch’s international

properties) and no one zone stands in complete isolation from the others. Networks

and relations are facts of contemporary media (Castells, 1997; Trudel, 2006). The

changing face of digital broadcasting is certainly an increased challenge for national

regulators and demands innovation and structural readjustments, but such has always

been the hallmark of inventive public policy. As Monroe Price observes in Media

and Sovereignty: “those who ring the death knell of the state may ring too soon”

(Price, 2002, p. 28; also Braman, 2004).

1.3 The CRTC

…the question of delegation to an independent regulatory authority is a settled one in Canada. (Perry, 1970, p. 14)

It was over questions of national sovereignty that the CRTC was conceived and

launched in 1968. The CRTC was organized to replace the Board of Broadcast

Governors, the regulator which had been in place since 1958. The significant new players on the national communications scene were cable operators, who had been

expanding their market base for years outside the realm of regulation alongside the official Canadian system and posed a threat to the sovereignty of the Canadian system by offering a wide choice of mostly American channels. Richard Schultz observes

that cable in the 1960s

…threatened the most fundamental ideas and policies of the traditional

broadcasting regulatory regime through its ability to deliver American

television signals directly to Canadian viewers (Schultz, 1999, p. 30).

The Board of Broadcast Governors did not appear up to the task of confronting the large challenges facing the Canadian system. The BBG had a weak reputation - largely the product of the Broadcasting Act of 1958 which has been critiqued as

“inadequately considered and unfortunately drafted” (Stewart & Hull, p. 280). It did not have the power to issue or revoke licenses and the board members were generally seen as lacking in expertise. As such, its chairman Andrew Stewart largely viewed the

BBG as an essentially administrative body (Stewart & Hull). In his 1990 PhD thesis,

Richard Hall notes that Prime Minister John Diefenbaker’s dentist was appointed a board member of the BBG (Hall, 1990).

The BBG had some notable accomplishments in its ten year reign - it had, in essence, been true to the spirit of the 1958 Act and had legitimized the place of the private sector within the Canadian system. The 1957 Fowler report, which informed the 1958

Act, made this point clear when it recognized “that the mixed Canadian system of public and private ownership is here to stay” (Canada, 1957, p. 13). In its decade

tenure, the BBG introduced the private second national television network (CTV), oversaw the arrival of colour television, and added educational and local content regulations for broadcasters (Stewart & Hull, p. 275).

The CRTC was very aggressive in pursuing its mandate in its early years. Marc

Raboy refers to this era as a period of “intense transformation” (1990, p. 226). The inaugural chair of the CRTC, Pierre Juneau, was already well-known in Ottawa, having served in the 50s and 60s with the National Film Board of Canada. In 1966,

Juneau left the NFB to become vice-chairman of the BBG. As a known and connected figure in Ottawa and because he had impeccable credentials in the field,

Juneau was able to move decisively (too decisively for some) and quickly established the authority of the CRTC.

…that the Commission displayed much energy before 1976 derived from the

fact that it was a new organization, imbued with a sense of mission; and

finally, the organization in a very real sense was the government repository of

expertise in communications matters. (Hall, p. 300)

Then, as now, the Broadcasting Act gave the CRTC authority “to regulate and

supervise all aspects of the Canadian broadcasting system” – a role the new regulator took to with vigour (Canada, 1968, p. 15). An early key move was the 1969 direction from government to the CRTC that broadcasting licenses not be issued to non-

Canadians, guaranteeing Canadian ownership. The CRTC also moved quickly to bring cable distribution within the fold of the system, thereby giving it regulatory

authority to oversee this growing sector. The domestic broadcasting industry,

justifiably anxious about cable’s ability to bring greater amounts of popular American

programming into the Canadian home, was financially reinforced by the 1971 regulation to oblige cable operators to provide simultaneous substitution on American channels for local advertising when Canadian stations were showing the programme

at the same time (a regulation that remains in place, however controversially, to this

day). It also required cable to set aside a channel for community content – a

regulatory manoeuvre which used a potentially destabilising technology to instead

reinforce local concerns.

Despite the gains private broadcasters made with this decision, they were furious at

the next bold move by the still fledgling regulator: newer and tougher Canadian

content rules than the broadcasting system had previously ever seen. There had been

a 55% Canadian content rule under the BBG regime but it was weakly enforced, and

by 1970 “its spirit was dead” (Bird, p. 448). The CRTC’s new approach stated that programs of non-Canadian origin “could not occupy, on the average, more than 40 per cent of the schedule between 6:30 and 11:30 pm” (CRTC, 1970, in Bird ed., p.

450). The new regulations also applied a 30 % Canadian content rule to Canadian

AM radio.12

The private broadcasting industry reacted with predictable outrage. The private

sector’s magazine, Broadcaster (“Canadian” was dropped from the title in 1969),

12 The Canadian Academy of Recording Arts and Sciences annual awards are called the Juno Awards in honour of former CRTC chair Pierre Juneau, in particular for his work in establishing Canadian content on radio.

called the CRTC a group of “fanatical idealists”, elitists who could not understand the

average Canadian “who sweats his guts out in some plant for eight hours a day” (in

Bird ed, pp. 457-458). They questioned the demand for Canadian programming in the first place and, in a clear effort to stake claim to the ‘public interest’, compared the forceful actions of the CRTC to “a shaft pointed right at the heart of the democratic system which is our national lifeblood” (ibid, p. 454).

Despite the ensuing hyperbole and populist rhetoric from the private sector, such bold regulation did indeed blur the line between regulator and policy-maker and caused one legal scholar to write that the CRTC was a “mini government” (Perry, 1970, p.

8). There is little doubt that between 1968 and 1982, the CRTC made policy; however, a 1990 study concluded the policy-making took place within its statutory mandate to oversee and supervise all aspects of the system and further the objectives of the Broadcasting Act (Hall, p. 319).

1.4 Arm’s Length: Pay-TV and DTH Satellite

A constant struggle since the birth of the CRTC has been to find an adequate balance

between the need for a public regulator to be free from political interference, while

recognizing the claims to democratic legitimacy made by elected officials. The

dispute over who should actually be in control has proven central to the struggle

surrounding the digital television transition in Canada. This regulatory give and take

was exemplified during the tenure of the Department of Communications (DOC) in

Ottawa (it was removed by Brian Mulroney’s Progressive Conservative government

in 1993). For much of the 1970s, when the CRTC was at its most active, there was a

desire on behalf of industry and some politicians to remove powers from the CRTC

and place them in the hands of the DOC. At one point, the Chair of the CRTC made

the same observation. Speaking before a Special Committee of Regulatory Reform in

1980, John Meisel noted that “very often the Commission was called upon to make

decisions that probably ought to have been made by Parliament” (Canada, 1980, p.

15). The sitting government could send CRTC decisions back for review, but CRTC decisions could not be altered by Cabinet. They could however, be set aside, though government was wary of taking this step.

There are in essence two key reasons for the CRTC’s (and other regulatory agencies’) required independence: regulation requires a high degree of expertise, continuity and stability, which traditional government departments cannot provide, and insulation of regulatory procedures such as license granting from the political process is required in order to ensure impartiality (Hall, p.14). After the regulatory melee of the first years of the 1970s, two key cases provide a window into the continuing struggle for control between the regulator and elected government officials: the Pay-TV battle of the late

70s/early 80s and the introduction of Direct-to-Home satellite in Canada in the 1990s.

In 1976, then Minister of Communications Jeanne Sauvé gave a speech to the

Canadian Cable Television Association in which she stated, “pay-TV is inevitable”

(Woodrow and Woodside, 1982, p. 37). The statement flew in the face of a CRTC ruling in 1975 that the Canadian broadcasting system was not ready for the challenges of pay television (Schultz, 1999). In her speech, the minister made it clear the government would be issuing a policy statement on pay television and she expected the CRTC to call for license applications.

Richard Schultz writes,

In short, the minister was insisting that the department and not an independent

agency would be responsible for the development of public policies. The

agency’s role, as far as the minister was concerned, was confined to

implementing such policies (1999, p. 34).

Jeanne Sauvé made her speech to the CCTA in 1976. In June 1977, the CRTC began

public hearings on the matter of pay-TV licenses and listened to over 140

submissions. In March of 1978, the CRTC released its Report on Pay Television.

The report concluded, “It is not possible on the basis of the submissions and the

Commission’s further analysis to recommend the introduction of pay television at this

time.” (Woodrow & Woodside, p. 43). As per the 1968 Broadcasting Act, the CRTC

claimed to be working in the public interest and had found “strong support only from

the cable industry and a few program producers who would benefit directly” (ibid, p.

44). According to the regulator, there was little demand for the service and the CRTC

believed it would disrupt the broadcast system already in place. The CRTC was

obviously squarely at odds with the expressed wishes of the sitting government. An arm’s-length institution is theoretically free of the influences that often inform political decisions, and this case proved exemplary: the speechwriter for Jeanne

Sauvé had also been a chief lobbyist for the Canadian Cable Television Association

(Schultz, 1999).

The new Conservative government of 1979 succeeded in forcing the resignation of the Chair and replaced him with an acting Chair of their selection. The new chair

(John Meisel) agreed to a committee to again examine the pay-TV issue in Canada.

This committee (the Therrien Committee) was composed of CRTC and provincial representatives. The committee endorsed allowing pay-TV into Canada but in a more competitive approach than was originally supported by Jeanne Sauvé. There would be no monopolies as had been the case with cable, much to the dismay of the cable companies. Late in October 1980, the Minister of Communications announced the

CRTC and the federal government had endorsed the recommendations of the Therrien

Committee. In April 1981, the CRTC issued a call for licenses.

The first pay-TV licenses were issued in 1983, seven years and two government changes after the Minister of Communications made her initial speech to the CCTA.

In the end, the government did get the result it wanted, albeit in an altered form, but the CRTC had asserted itself again as the institution responsible for final decisions.

The next major public power struggle between the federal government and the CRTC occurred in the early 1990’s over Direct-to-Home (DTH) satellite services. Once again, the Canadian broadcast regulators were fighting against the intrusion of

American signals, this time from space. The new pizza-sized satellite dishes which

could pick up American broadcasts directly and economically were called

“tombstones for the CRTC” by former CRTC chair John Meisel. (Fennel, Maclean’s,

1996, p. 38) The reality was that it was not possible to block the signal at the border

and Canadians were taking advantage of the enormous range of American

programming via illegal satellite dishes. Commenting on the promise/threat of DTH

services, Richard Schultz writes,

“DTH promised to challenge fundamentally both the traditional ideas or

rationale for regulating broadcasting in Canada and the current beneficiaries

of that regulation: broadcasters, cable companies and, not insignificantly, the

CRTC itself” (Schultz, 1999, p. 36).

In 1993, the CRTC recognized the impracticality of strictly protectionist measures,

and took steps to encourage the growth of Canadian DTH services. To entice

Canadian industry, the carrot was offered of exempting Canadian DTH service providers from licensing and detailed regulation. This essentially meant a Canadian

DTH provider who met certain criteria could bypass the lengthy and costly public licensing procedure. Among the stipulations to qualify for this exemption were that the DTH provider used Canadian satellite facilities, offered a preponderance of

Canadian channels, the DTH distributor did not originate programming, and only

foreign programming services formally authorized by the CRTC were to be

distributed. In August of 1994, the CRTC announced that only one applicant had met

the criteria: ExpressVu was granted an exemption license. The sole competitor,

Power DirecTv, was ruled ineligible because it planned to use American as well as

Canadian satellites.

The political furor that followed this decision “was unlike anything that had

previously been experienced in Canadian communications regulation.” (Schultz,

1999, p. 37) The media and the government criticized the CRTC for the strict rules of

exemption and the creation of a noncompetitive market. The CRTC claimed that

other providers could eventually be given a license but they would have to go through

the public licensing process. The government appointed a panel to review the CRTC

decision and the panel came back with a dramatic recommendation: that the cabinet

issue a directive to the CRTC ordering it to license all qualified DTH applicants. The authority for the government to issue an order to the CRTC had only recently been

written into the 1991 Broadcasting Act and had never been used.

Then CRTC chair, Keith Spicer, spoke before Senate and House committees

reviewing the directive and claimed that the government’s action was “overstepping

its legitimate authority” and “an abuse of power” (Schultz, 1999, p. 38). The CRTC

threatened to challenge the directive in court. The government’s role, Spicer

contended, was to offer direction not “to usurp the commission’s exclusive role in

implementing broadcasting policy for Canada” (Schultz, 1999, p. 38). The previous

closed-door disputes between the government and the broadcast regulator were now public in an unprecedented fashion. Maclean’s magazine described the CRTC-

Committee debates as having “all the hallmarks of a U.S. television talk show”

(Caragata, 1995).

The political drama in Ottawa was increased by the fact that the president of Power

DirecTV was André Desmarais, Prime Minister Jean Chrétien’s son-in-law. The chair of the company, Joel Bell, was also well-connected with the Liberal Party and had previously held the positions of economic advisor to the Prime Minister’s Office and vice-president of Petro-Canada under earlier Liberal governments.

In the end, the government issued the order and Canada entered a new era in the power relationship between the sitting government and the broadcast regulator.

While the government asserted authority over the CRTC, it was the CRTC that established the parameters of regulation to govern DTH services. The licenses were still subject to the promotion of Canadian content and a reduction of competition from American programming, as had been the CRTC policy applicable to cable companies.

In recent years, the divide between government and regulator remains contested terrain, although the government has demonstrated a greater willingness to challenge and direct the CRTC in the jurisdiction of telecommunications. On December 14,

2006 Industry Minister Maxime Bernier released the following: Order Issuing a

Direction to the CRTC on Implementing the Canadian Telecommunications Policy

Objectives. The basis for this intervention was clearly the 2006 Telecommunications

Policy Review Panel Final Report and the Order stated as much:

In creating the Policy Direction, the Government is signalling its vision for the

future of telecommunications policy in advance of more substantial regulatory

change by providing policy guidance on how the Commission should exercise

its regulatory mandate and direct it to take a more market-based approach to

implementing the Act. The text of the Policy Direction draws heavily on the

proposal recommended by the Panel. (Canada, 2006a)

The Telecom Report was eagerly accepted by the young Industry Minister who was obviously determined that it would be no dust collector. As required by the Act, the

CRTC responded to the Order. The CRTC database cites 15 references to the 2006

Telecom Policy Review Panel Report, 10 of which were final CRTC decisions.

Whether or not the government would interfere in the more politically sensitive area

of broadcasting is unclear. Former Liberal Heritage Minister Liza Frulla expressed

frustration by the limitations of her position:

There are so many barriers with this bloody arm’s length principle that it’s

very hard to come in and implement directly some changes. (L. Frulla,

personal interview, Feb 26, 2008)

Richard French was the vice president of telecom for the CRTC from 2006 to 2008 and expresses some sympathy for the Conservatives’ position:

They (Liberals) made a calculation which was “the CRTC makes politically

sensitive decisions, it’s just as well we don’t have to make them”. The

Conservatives don’t have that attitude. (Their attitude is) “We’re making

policy”.

You can adopt the policy of the Liberals: that the CRTC is the final authority

and messing with it is a compromise of the principles of independent

regulation. And it’s a defensible position. And you can also take the position

that the law says, and independent ministerial responsibilities require, that the

government make the final decision on these big issues, and it’s also a

perfectly defensible position.

(R. French, personal interview, April 9, 2008)

French does not believe the Conservatives would be so eager to become involved, and therefore politically accountable, in the more politically charged sector of broadcasting.

1.5 A New Act and the Digital Era

The 70s had seen the CRTC approach its position as regulator with vigour which some interests celebrated, while others found troubling. Perhaps in an effort to restore power on the side of Parliament, the 80s were witness to two major struggles

which redrew some semblance of boundaries between government and regulator.

Still, no government of any stripe wanted to take on the full responsibilities bestowed upon the CRTC. As Feldman and Janisch observe: “there has been a consistent trend towards developing bodies with greater independence from the political process” and it has taken 40 years to reach the levels of independence of the 1980s (Feldman &

Janisch in Woodrow & Woodside ed, p.102). In the current decade, the government has again made some steps to assert authority over the regulator, but largely in the less controversial area of telecom policy.

Though the Canadian broadcasting system has historically been a site of constant debate and jockeying for positions of power and influence, there is a surprising contemporary consensus around the primary document of the current system: the

1991 Broadcasting Act. There have been a series of studies on the Act in the past decade and each has noted the adaptability and continued relevance of the legislation.

Among the key reviews:

2003 - Our Cultural Sovereignty: the Second Century of Canadian

Broadcasting.

The 872 page report was the product of two years of work by an all-party parliamentary committee and two expert academic advisors, David Taras and Marc

Raboy. The Committee’s purpose was to determine whether the ideals and objectives set out in the Broadcasting Act of 1991 were being met and whether the Act itself was

in need of reform. Our Cultural Sovereignty was tabled in the House of Commons on

June 11, 2003 and contained 97 recommendations for Canadian broadcasting in this new century. Its conclusions regarding the Act found

the Act itself needs few changes. It was finely and painstakingly crafted and

reflects a consensus reached after a long and arduous consultation process… it

remains a viable instrument of public policy. (Canada, 2003, p. 7)

2006 - The Future Environment Facing the Canadian Broadcasting System: A report prepared pursuant to section 15 of the Broadcasting Act.

This report was the product of a 2006 Order in Council given to the CRTC, announced by the Minister of Canadian Heritage, Beverley J. Oda, to draw on the expertise of the CRTC to examine the future technological environment facing the

Canadian broadcasting industry. After hearing from 52 individuals, consumer groups, broadcasters, distributors, and industry associations, the report was tabled on

December 14, 2006. It concluded the following concerning the Act:

The majority of parties either explicitly or implicitly supported the current

legislative framework under the Act. While parties held a wide range of views

on matters of priority and degree of regulatory oversight, even those who

called for a different emphasis were largely content to advocate change from

within the current legislative framework. (Canadian Radio-Television and

Telecommunications Commission, 2006, p. 332)

2008 - The CRTC and Broadcasting Regulation in Canada.

This exhaustive study by legal scholars Liora Salter and Felix Nii Lantei Odartey-

Wellington examines the work of the CRTC and broadcasting regulation within

Canada. Unlike the other studies mentioned, this book was not a government-

sanctioned report but is an academic book published by Thomson-Carswell. The

study concludes that “the Broadcasting Act is a marvellous piece of legislation” (p.

787) and like other studies, sees no need for a new Act.

This dissertation accepts the verdict that the Act of 1991 is not in need of revision and

has adapted well to the changing media environment. In its assessment of the

CRTC’s record of promoting democratic imperatives in the broadcasting system, this

dissertation will recognize the responsibilities and limitations as mandated in the

1991 Broadcasting Act.

This chapter established the historical basis for regulation in the area of broadcasting

and examined the turbulent first two decades of the CRTC, especially in regards to

the struggle to determine the nature of its “arm’s-length” relationship with the

government. The next chapter seeks to establish how the field has shifted as the

broadcasting system reacts to changing technologies, Canadian legal parameters and a

global movement toward a stronger role for the marketplace.

Chapter Two: Technology and Neoliberalism

…already the media system of the 1960s seems about as relevant to what lies before us as a discussion of the War of the Roses does to military strategists. (Robert McChesney, 2007, p. 11)

Public policy, the studies which inform it, and the regulation required to actualize policy objectives, reflect the politics, culture, technology, and prevailing economic

trends of an age. As the above quote from McChesney makes clear, current

circumstances are unique and demand adjustments on behalf of regulators and

academic critics – the tried and true will no longer suffice. The purpose of this

chapter is to examine two of the most powerful forces of the digital era and their

effect upon broadcasting regulation in Canada: changing technology and neoliberal

economic policies. The political economy of communication is strengthened by its

use of history, yet must not fall victim to entrenched positions that refuse to recognize

contemporary realities. As stated in chapter one, the institutional stream of political

economy is much more adaptable this way than its Marxist or classical liberal

counterparts.

As an historical example of the impact of the greater economic and social trends, the

foundational Aird Report of 1929 was infused with the prevailing orthodoxy of its

period: the committee and its report were rife with pro-British sentiment, suspicious

of American cultural and economic expansion aspirations, and convinced that the

private sector on its own was not yet mature enough to contend with the complexities

of constructing a national broadcasting system (again, the railway analogy is apt).

There was nothing overtly radical in these ideas and the report, chaired by a banker

(Sir John Aird, president of the Canadian Bank of Commerce) and commissioned by

Mackenzie King’s Liberal government, was by and large accepted by the

Conservative Prime Minister, R.B. Bennett in 1932.13 The ensuing launch of the

Canadian radio broadcasting system was a reflection of many of these concerns.

Likewise, subsequent technological and regulatory developments, such as television in the 1950s, continued to emphasize the primary position of the public sector - not uncommon in an age of Keynesian economics.

The 1960s brought about the rise of cable television and the newly-minted CRTC was faced with a new technological dragon to slay (perhaps “domesticate” is a more appropriate term). Cable distribution systems in the 1960s retransmitted American television broadcasts via cable, for a fee, often to places where over-the-air broadcasts would not reach. Cable distribution was of course legalized, regulated, and now forms a highly profitable section of the Canadian media system. The early years of the CRTC were largely spent adapting to the new technological realities of the era – a process which has its periods of intensification (such as the present), but has never fully subsided in the 40 years of the regulator. It likely never will.

13 There were some clear changes between the Aird Report of 1929 and the Act of 1932, including a diminished role for the provinces and a more substantial role for the private sector, resulting in a “hybrid system” (Raboy, 1995b, p. 105).

The Broadcasting Act of 1991 was equally a product of a specific historic period. It is

clearly influenced by, among other things, the sweeping scope of the 1982 Canadian

Charter of Rights and Freedoms. The 1986 Task Force on Broadcasting Policy

(Caplan-Sauvageau), the highly influential report which preceded the Act, observes,

“A balance among the various rights and freedoms at issue must be sought and taken into consideration in all important decisions” (Canada, 1986, p. 138). In 1997’s

Regulating on the Run: the transformation of the CRTC as Regulatory Institution,

Bruce Doern echoes this statement citing “…the need for the CRTC to “Charter- proof’ everything it does” (Doern, 1997, p. 527). The policy objectives stated in section three of the Act were, as they should be, indicative of the greater political culture in Canada and mandated that the Canadian broadcasting system must recognize the “multicultural and multiracial nature of Canadian society and the special place of aboriginal peoples within that society” – a detail conspicuously lacking from the Broadcasting Act of 1968 and indicative of the impact of the Charter in the greater realm of policy (Canada, 1991: 3diii).

Thus, we can see effective broadcasting policy is always a reflection of social, economic and technological realities, what Peter Goodwin calls “the brute force of current fact” (in Doyle ed., p. 173; see also Horwitz, p. 44). The Canadian political and economic climate continues to shift. The current challenges facing broadcasting policy in Canada still involve familiar questions related to sovereignty and technology, but now must do so in an environment which includes a vastly expanded and financially robust private sector, a public broadcaster weakened from its previous

position of prominence within the system, an established broadcasting infrastructure,

and a population which identifies less and less with the British as a cultural model.

Perhaps more importantly, the economic orthodoxy of the last two decades has seen a

decisive shift from the post-war decades, marked by the rise to prominence of the

private sector and an overarching faith in market mechanisms.

Keynesian economics, in which the government kept a steady hand upon the tiller of

the economy, so prominent in the mid 20th century, was usurped by the Reagan-era belief that the market will self-regulate. Other facets of this neoliberal economic paradigm include the lowering of taxes, labour market flexibility (weakening of

unions), balanced budgets, and the decoupling of banks from state control (Freedman,

2008). Broadcasting industries were not the initial focus of those economists who

espoused “market discipline” over regulation in the post WWII era, but broadcasting faced increasing pressures from this global movement in the period between the

1980s and the current decade. The digital television transition thus far is largely a product of this economic philosophy. In their 2008 book The CRTC and

Broadcasting Regulation in Canada, Salter & Odartey-Wellington note,

the theory of economic regulation…has immediate and direct applicability to

broadcasting regulation, and can be discerned in almost every measure that the

CRTC has taken recently. (Salter & Odartey-Wellington, p. 634-635)

Economic policy is cyclical and it is possible the laissez-faire approach to markets will run its course. The market uncertainties of 2008 have raised questions if the era

of deregulated markets is now coming to an end, with the United States and Britain, the two most vociferous proponents of neoliberal economics, largely leading the regulatory charge (Skidelsky, 2008). Whatever the outcome of the current economic uncertainties, the period of question in this dissertation (1991-2008) remains dominated by the prevailing ethos of neoliberal economic markets.

This chapter then focuses upon two key forces at work in shaping broadcasting regulatory upheaval within Canada in the post-welfare state era: the rapidly changing broadcasting technology; and the steady global descent of the welfare state, accompanied by the rise to prominence of neoliberal economic philosophy. These external developments are reflective of a greater hegemony at work and, while not directly connected to broadcasting per se, have had a profound impact on the overall scope of regulation in the period following the 1991 Broadcasting Act. Neither technology nor prevailing economic trends are necessarily explicitly mentioned in the stated broadcasting policy of a given period, but they are always informing the debate. Each of these changes is global in scope but it is wrong to believe the national responses are therefore uniform - history, national priorities and institutional structures play a prominent role.

Technological change and the slide of the welfare state may not be unique to Canada, yet there are specific ways in which these developments have challenged the traditional structure of the Canadian broadcasting system. As noted in the first chapter, the Canadian system is a unique regulatory entity (though arguably less so

given current circumstances) and global technological and economic pressures can

yield distinctly national responses. It is well beyond the scope of this study to attempt a thorough analysis of the science involved in the change to digital broadcasting, however, it is necessary to examine how the changes in the technology of broadcasting have a tangible impact at the level of regulation. Stefaan Verhulst, the former co-director of the Programme in Comparative Media Law and Policy

(PCMLP) at Oxford University writes, “Public-interest objectives do not become irrelevant or invalid as a result of a technological change” (Verhulst, 2002b, p.138).

Is the public interest, defined by Feintuck as equality of citizenship, challenged by the regulatory decisions spurred by new technology?

Likewise, few aspects of Canadian society have been left untouched by the expansion of neoliberal ideology, but this dissertation will examine how this economic dogma penetrated the unorthodox markets of broadcasting, the challenges this presents to traditional notions of the public good, and how this has manifested itself in the regulation of recent decades in Canada.

2.1 The Chicken/Egg of Technology/Regulation

Contemporary academia has been wary of the label technological determinism. Darin

Barney writes “to label someone a technological determinist is to condemn him or her as thoughtless and uncritical…” (Barney, 2000, p. 35). The idea that technology itself can be a driving force in history, such as in the writings of Karl Marx and his

often-quoted line, “The windmill gives you society with the feudal lord: the steam- mill, society with the industrial capitalist” (in 'The Poverty of Philosophy') is viewed

as overt technological determinism.14 This and other media-centric views such as

Canadian scholar Harold Innis’ theory that the political reach of a given society is largely determined by the prevailing medium (the Bias of Communication), have been challenged by theorists of the social constructivist school who claim the true essence of technology can only reveal itself via social uses and individual adaptation

(Williams, 2005). This ontological divide has caused substantial rifts between cultural studies and more critical Marxist/political economy schools of communication.

Clearly the democratic process is one in which the outcome is never completely predetermined – the word process itself implies as much - however the technological changes in communication, in particular the change to digital transmission, is proving to be a catalyst for much of the regulatory dilemma now facing Canadian broadcasting. Policy playing catch-up to technology is not a recent phenomenon.

Marc Raboy notes that the 1973 Green Paper on communications policy “reflected the notion that the legislative and regulatory contexts had been bypassed by technology” (Raboy, 1990, p. 221). In his 1977 PhD thesis on the early years of cable distribution in Canada, future Brian Mulroney advisor and Globe and Mail columnist

Norman Spector observes:

14 Langdon Winner argues Marx’s view is more complex, incorporating arguments which could be viewed as containing both constructivist and deterministic elements (Winner, pp. 14-16).

…successive Canadian governments have been determined to subordinate

communications technology to principles of national policy, rather than allow

national policy to succumb to the logic of technology. (Spector, 1977, p. 15)

The social response, championed by social constructivists, is pieced together via

regulation, but the driving force is often technology. Again the split between

regulations and policy is significant: policy can and does withstand technological

leaps; however regulations must adapt to technological advances to bring them in line

with prescribed political goals as stated in policy. The 1991 Broadcasting Act clearly

mandates as such in section 5: 2(c):

The Canadian broadcasting system should be regulated and supervised in a

flexible manner that is readily adaptable to scientific and technological change

Therefore to fully grasp the regulatory options facing the public regulator, attention

must be paid to the advances in the science of broadcasting. As Darin Barney argues,

In a society where technology is ubiquitous and technological progress is an

overwhelming collective social project, certain ways of living recommend

themselves, persuasively, at the expense of others. (Barney, 2005, p. 16)

For purposes of this dissertation and, one could argue, for broadcasting regulation in general, the determinist/ constructivist dichotomy is a false one. Canadian broadcasting regulation has spent the last century in a constant effort to keep pace with the changing technology. The early Canadian radio environment (it could hardly

be called a “system”) endured more than a decade of chaotic development before the

need for regulatory oversight was formally recognized in 1929 by a Royal

Commission (Nash, 1994). The technology of radio instigated the need for political

response; which is not to say the technology dictated the range of options. Three

decades after the birth of radio, before the mainstream commercial use of television

broadcasting, television signals were used as, among other things, a tool for guided

missiles in World War II (Canada, 2003). Again the technology took the lead, but the

policy reaction was by no means preordained. In the current era, technology is once

again challenging existing regulatory structures, in what Collins and Murroni refer to

as “the erosion of national communications sovereignty through technological

change” (1996, p. 188).

Certainly much of the new media (an increasingly inaccurate term) of the digital era

has been shaped by users in ways no one would have foreseen when drafting the 1991

Broadcasting Act. Growth areas such as the website Youtube and file sharing

software have demonstrated the adaptability of the digital format, much to the dismay

of traditional broadcasters and industry; however, a broadcasting system is not

happenstance and post-modern faith in individual interpretations of technology are of

little value at the level of policy and regulation formation. In his seminal work

Dependency Road, Canadian communications policy scholar Dallas Smythe correctly observes “Politics, then, is always in command” (1982, p. 223).

This remains especially true in the progression of digital television. Despite the

proposed industrial benefits of this new broadcast paradigm, the lead has come from

governments, who have at times taken a decidedly technologically determinist stance

to support their position. Ardent digital television supporter and former FCC chair

Michael Powell gave a speech in 2002 where he used explicitly technologically

determinist language to further his political agenda: “Every communications sector is

embarked on an unavoidable journey—migrating to digital architecture in order to

provide the services of the future….We are where we are. There is no turning back

and no retreat” (Powell, 2002).

Despite claims to the contrary, governments are by no means helpless in the face of

the digital upheaval. In the 1999 CRTC new media decision, which declared the

internet free of regulatory oversight, politics did not cede authority to a new and

unregulatable technology as some libertarian early internet advocates had proudly

proclaimed; instead, a political decision was made that government interference at

that point in the internet’s development was not warranted.15 It was a decision

consistent with the “light touch” imperative of the CRTC’s post-1991 regulatory approach (von Finckenstein, 2007). As noted in the opening chapter, the internet in

Canada is thus far free from government regulation.16 In 1999, the last time the

CRTC visited the issue of regulation and the on-line world, the decision observes:

15 For an example of this early advocacy for a libertarian on-line world, see John Perry Barlow. 1996. “A Declaration of the Independence of Cyberspace.” Economic Frontier Foundation. http://homes.eff.org/~barlow/Declaration-Final.html

16 As Lawrence Lessig and others have forcefully argued, this is not to say the internet is a regulation- free zone (Lessig, 1999). Various websites and ISPs frequently monitor and control what can and

The Commission considers that the majority of services now available on the

Internet consist predominantly of alphanumeric text, and, therefore, do not fall

within the scope of the Broadcasting Act and are thus outside the

Commission's jurisdiction. (CRTC 99-14, Report on New Media)

This is obviously no longer the case. Audiovisual services are now a standard part of

the internet experience. The CRTC has planned to reassess the 1999 New Media

decision beginning with public hearing in February 2009 which still may yet legally

identify internet programming as broadcasting (CRTC 2008-11). This is certainly

contestable as video viewing on the internet remains dominated by amateur-produced

content as opposed to traditional professional television by a rate of roughly two to

one (CRTC, 2008, p. 171). However, for the period of focus for this dissertation,

1991-2008, the internet remains distinct from broadcasting and therefore neither the

Broadcasting Act nor, by decision, the CRTC, are applicable.

2.2 Explaining the Digital Era

This dissertation has decided upon the somewhat loose label of the digital era to depict the current evolving technological regime. To properly debate the merits of digital television requires at least a basic understanding of the technology involved.

cannot be viewed by individuals surfing the web and copyright laws are extending the realm of property protection into the on-line community.

This should not be interpreted as somehow deterministic. As American political theorist Langdon Winner observes for his theory of technological politics:

Rather than insist that we immediately reduce everything to the interplay of

social forces, the theory of technology politics suggests that we pay attention

to the characteristics of technological objects and the meaning of those

characteristics. (Winner, 1986, p. 22)

Likewise the unique properties of digital transmission must be factored in determining the scope of the change from the established analogue model, which has served Canada for decades.

Digital communication replaces the analogue model where signals are physically emulated via a wavelength, transmitted on a frequency and amplified by the receiver.

In the case of radio and television, the two common frequencies are amplitude modulation (AM), which varies the amplitude of the carrier signal, and frequency modulation (FM), which modulates the frequency of the carrier. Ultra high frequency

(UHF) designates a range (or band) of electromagnetic waves with frequencies between 300 MHz and 3 GHz (3,000 MHz). Lower frequency signals fall into the

VHF (Very high frequency) or lower bands, from 30 MHz to 300 MHz. The length of analogue waves can vary from one centimeter for microwaves to several kilometers for very, very low frequency waves (VVLF), used to communicate with submarines (Canada, 2003, p. 46). The VHF and UHF bands are where most current

analogue television signals reside and is the “prime real estate” on the spectrum coveted by wireless providers for its greater range.

The ability to use digital encoding for information predates the historical period

covered in this dissertation. The period preceding the 1991 Broadcasting Act saw

many breakthroughs in the applications of digital technology for broadcasting. A

2006 CRTC commissioned report on the digital transition observes

The development of DTV (digital television) began in the late nineteen

eighties with broadcasters and key industry manufacturers trying to find a

spectrum efficient method for HD and an enhanced value for the over the air

signal. (McEwen, 2006)

In the era between 1991 and 2008, digitalization has permeated virtually all aspects

of mass communication (distribution, radio, television, and internet) and most western nations set dates to switchover to a fully digital national transmission system.

The regulatory scaffolding, constructed over the last century, must be reassessed given the technological realities of digitalization. Digitalization can be described as a system which breaks information down into a binary numerical pattern where images and sounds are encoded as "0" and "1". Vincent Mosco notes that the code of ones and zeros, “a common, universal language for electronic media”, has great appeal for users and producers (Mosco, 2004, p. 155). For regulators, the general public interest benefits of digitalization include a more efficient use of spectrum space and potential

public revenue from selling spectrum capacity.17 For consumers, digital broadcasts

promise clearer reception, greater choice, and the increasing appeal of high definition

(HD) television. HD television may be seen as a potential saviour for traditional

broadcasting, as its high bandwidth requirements make it a poor fit for internet

broadcasting and sales of new HD compatible televisions have been brisk in recent

years. Digitalization also has obvious benefits for an increasingly consolidated media

industry: communication networks, previously structured upon distinct analogue

signals, can now potentially process digital television, telephone, internet and radio

signals all on the same network and with greater clarity.

In the introduction to their 2007 collection The Economic Regulation of

Broadcasting Markets, Jürgen Von Hagan and Paul Seabright describe the new digital

media landscape as one of encryption (intrusiveness issues are not so clear);

compression on the spectrum; timeliness, richness of image, and multi-media content

available to different receivers; where processing transmissions has become much

more sophisticated with computers and other ways of manipulating content; and the

costs of creating programming have dropped substantially (von Hagan and Seabright,

p. 3). Each of these characteristics has implications for the regulatory structure of

the Canadian broadcasting system.

As stated at the end of chapter one, the difficulty of the current broadcasting situation

in Canada is not a reflection of the existing legislation; in fact, the wording of the

17 The 2008 spectrum auction in Canada raised over $4 billion for the Canadian government - far more than the projected total.

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current Broadcasting Act has demonstrated much greater flexibility in its definition of

“broadcasting” than in its 1968 counterpart.

Broadcasting Act of 1968:

3 b. “broadcasting means any radiocommunication in which the transmissions

are intended for direct reception by the general public”.

1991 Broadcasting Act: ["broadcasting" « radiodiffusion »]

2(1): "broadcasting" means any transmission of programs, whether or not

encrypted, by radio waves or other means of telecommunication for reception

by the public by means of broadcasting receiving apparatus, but does not

include any such transmission of programs that is made solely for

performance or display in a public place;”

The current technologically neutral language has proven successful in an era when

“radiocommunication” is no longer the only transmission game in town and the

“receiving apparatus” is not restricted to the radio or the living room television set.

While the policy language remains intentionally imprecise, the onus then falls upon the CRTC and appropriate regulation to guide the Canadian system through the technical and industrial shift to the digital paradigm. The period of 1991-2008 has seen the CRTC reconfigure much of the regulatory regime to accommodate the emerging digital environment. The CRTC recognizes this dilemma in its 2006 Digital

Migration Framework:

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Although the analog licensing and distribution framework has evolved over

time, the form it takes today remains largely a function of the cable television

distribution technology in place at the time the specialty and pay services first

emerged in the early 1980s. (CRTC 2006-23)

The digital transition is easily the greatest technological shift since the introduction of colour to television. The previous analogue television broadcasting regime, The

National Television System Committee (NTSC), was developed 65 years ago and became the analogue television transmission standard in Canada, the United States,

Japan, South Korea and a number of other countries, mostly in the Americas. A

NTSC television signal occupies a total bandwidth of 6 MHz to transmit one channel over the air to viewers, or as Henry Geller notes, a more appropriate digital measurement per channel is 19.3 Mbs (Geller, 1998, p.554).

The Advanced Television Systems Committee (ATSC) was established in 1982 and developed the ATSC A/53 digital television (DTV) transmission standard (the A/53 standard) based on this new transmission system. The same 6 MHz of bandwidth which used to carry one analogue channel can, using the digital ATSC transmit one high definition program stream, two medium definition program streams or up to five standard definition (SD) streams, as well as some associated data. As for audio, the associated standard, A/52, allows the transport of up to five channels of sound with a sixth channel for low-frequency effects (known as the 5.1 configuration). The flexibility to create different combinations is a key benefit of the A/53 standard.

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(CRTC 2006, Appendix B2) Given the increased capacity and clarity, and the

implications for industrial benefits in content and hardware production, it is easy to see the broad appeal of the digital system.

Many telecommunications carriers and Internet service providers see the commercial section of the 700-MHz spectrum as ideal for new wireless services. This is why the spectrum auction in various nations has generated such a strong industry response. A

wireless tower transmitting in the 700-MHz band can cover twice the geographic area as a tower transmitting in the 1900-MHz band, where many cell phones currently operate. The 700-MHz is superior for long-range data transmission and for rural broadband services.

Canada is set to switch to a fully digital system by the year 2011, though the firmness of this date is in question (Salter & Odartey-Wellington, p. 579). This is a full two years behind the United States analogue shut off (ASO) date, and it is hoped that this intentional technological lagging will result in financial benefits. In essence, the plan for the Canadian industry is that the massive shift caused by the world’s largest broadcaster making a complete change first, will trigger a drop in price for the

production and transmission equipment required for the Canadian changeover

(McEwen, 2006).

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In preparing for the ASO, the Canadian regulation has been more market-based than either its American of British counterparts. In a study prepared for the CRTC in

2006, Michael McEwen critiqued the Canadian approach. He notes,

Government has, to date, shown no inclination to make any change in its

policy of a market driven approach. This in the context of the mounting

evidence of successful European, Asian and American transition strategies,

which have specific milestones, firm ASO targets, and legislation to back the

plans up. To be blunt there seems to be no political will to take the necessary

actions to create an effective digital take-up in the over the air spectrum for

conventional broadcasters.

(McEwen, 2006, p. 46)

The U.S. model allows for a subsidy in the form of coupons for digital tuners, set at

$40 per coupon, two coupons per household if required. $1.4 billion was set aside by the U.S. Congress for tuner subsidy in America (McEwen, 2006, p. 37). In the UK, the consumer is subsidized via the introduction of Freeview, a company launched in

2002, owned and run by its five shareholders - BBC, BSkyB, Channel 4, ITV and

Arqiva, which provides free-to-air digital TV channels, radio stations and interactive services through an aerial (http://www.freeview.co.uk). The Canadian plan has offered no such subsidy to the consumer. There will be a rolling system for the

Canadian switchover with full implementation of digital by August 2011. In 2003,

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the CRTC announced in its regulatory framework for the distribution of digital television signals:

A BDU may submit an application requesting the Commission’s approval to

cease the carriage of analog signals once 85% of the BDU’s subscribers have

the ability to receive digital services by means of digital television receivers or

set-top boxes. The Commission will determine at that time, the terms and

conditions under which the analog services may be removed from the system.

(CRTC 2003- 61)

It should be noted that since approximately 85-90% of Canadians subscribe to either cable or satellite, this number should be easily met in most regions, with the exception of some urban centres. All current DTH satellite signals are digital and cable switchover to digital is increasing.

Canada is by no means alone in facing the challenges posed by the digital transition.

Worldwide, governments have been by and large convinced of the overall benefits of digital broadcasting, though international power dynamics are certainly a factor – when the centre of the global communications industry began the process to digital, other countries felt great pressure to follow suit. A brief look at international ASO dates shows Canada largely in the middle of the schedule.

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Table I International Analogue Shut Off Dates:

Australia 2010-2012

France 2012

Germany 2010

Mexico 2021

UK 2012

United States 2009

Japan 2011

Canada 2011

(McEwen, 2006)

2.3 Digital Adaptation and Regulatory Challenges

The switch from analogue to digital broadcasting creates opportunities for new media

platforms, some of which may thrive and prosper, and others that may flare up for a

moment and eventually fall into media history’s technological dustbin, right beside

1970s citizen’s band radios and 1980s beta home video recorders. Satellite Radio,

brought to Canada amid much hoopla and controversy in 2005, has thus far been a

disappointment for the two authorized national systems, Canadian Satellite Radio Inc. and SIRIUS Canada Inc. (CRTC 2005-61). In comparison to other new audio formats of the digital era, satellite radio finds itself lagging behind Video MP3

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players, Podcast listening, and streaming radio in terms of market penetration (CRTC,

2008). The numbers have been equally underachieving in the United States where the

two satellite radio providers, Sirius Satellite Radio and XM Satellite, announced a

merger in 2007, only ten years after receiving licenses from the FCC. Satellite radio requires a much more substantial capital investment than many of the formats which are now reaching a wider audience.

Other new technologies, such as video on a cellular phone have also not had huge

numbers thus far, despite being exempted from many broadcast distribution

regulations in the 1999 Report on New Media. Internet video has grown in

popularity, yet much of the content remains amateur videos on sites such as Youtube.

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Table II Adoption and growth / decline rate of various video technologies in Canada

English Canada French Canada

Adoption 2005 2006 2007 2005 2006 2007

Rate as % of population

PVR 4% 6% 10% 2% 4% 6%

Video on 5% 6% 7% 4% 7% 11%

Demand

Internet 21% 30% 38% 16% 26% 31%

Video

Video on NA NA 2% NA NA 1%

Cell Phone

Source: CRTC Communications Monitoring Report 2008, p. 172

If the broadcasting system has indeed been the 20th century railway for Canada - forging a unifying national bond between east and west - does the shift to digital transmissions which pay no heed to time zones or traditional program schedules (as is the case with Pay Per View and Direct to Home Satellite), and explode local market concerns (such as genre protection), when almost all major radio is now also streamed

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on the internet, pose fundamental challenges to the established parameters of the 20th century nation-state?

For example, the proliferation of DTH satellite broadcasting in Canada calls into question traditional market boundaries and the exclusivity of licences for that market.

These have been foundational regulations for the Canadian broadcasting system.

Does owning the local rights to a television program maintain value when the same show is available one hour earlier from another time zone?

This question was raised in the 2003 study, Our Cultural Sovereignty:

An added complication is that satellite technology allows viewers in western

regions to see certain American programs before their regularly scheduled

timeslot. This has consequences for advertising revenue for Canadian

broadcasters. The show Friends, for example, may be scheduled for 9:00 p.m.

EST on a Toronto station and 9:00 p.m. CST on a Winnipeg station. Since

satellite subscribers in Manitoba may receive programming from the Toronto

station as well as the Winnipeg station, they are able to watch Friends one

hour earlier. Both the Toronto broadcaster and Winnipeg broadcaster will be

able to request simultaneous substitution of its ads for those on the U.S.

channel showing Friends at the same scheduled time. This means that satellite

viewers in Manitoba who choose to watch the earlier showing of Friends see

the ads from the Toronto broadcaster. If there were a large number of

Manitobans watching the earlier showing of Friends this could increase the

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value of non-local advertising on the Toronto station, and could decrease the

value of local advertising on the Winnipeg station. (Canada, 2003, p. 288)

Under current (2008) BDU regulations, cable companies pay broadcasters 50 cents per subscriber to carry distant domestic signals and list them on higher channels.

Satellite companies can carry those signals free.

The development of video on demand and pay per view also poses some vital challenges to the traditional structure of the Canadian regulatory system. A founding principle of the Canadian system has been the mandated condition of license that the broadcaster must provide Canadian content. Current regulations stipulate that all radio stations must ensure that 35% of their popular musical selections are Canadian each week (CRTC 1998-41), and private television stations and networks and ethnic

TV stations must achieve a yearly Canadian content level of:

60% overall, measured during the day – i.e. 6AM to midnight;

50%, measured during the evening broadcast period – i.e. between 6PM and

midnight. (CRTC 1999-97)

The purpose of this regulation is to meet the Broadcasting Act policy objective that

Canadian broadcasting must

…encourage the development of Canadian expression by providing a wide

range of programming that reflects Canadian attitudes, opinions, ideas, values

and artistic creativity, by displaying Canadian talent in entertainment

programming and by offering information and analysis concerning Canada

and other countries from a Canadian point of view (3dii).

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This requirement often means broadcasters must provide airtime for Canadian

programming that is not nearly as popular as much of the international, often

American, shows. The cultural hope is that over time and exposure, viewers will

warm to Canadian-produced content. This approach is not nearly as effective in an

“on demand” television environment - a new product of the digital era where viewers

may select a program at any time from an a la carte menu of options. The

convenience and abundance of this particular digital platform is driven by well- established “brand names” that would offer little space for smaller-audience Canadian shows or community broadcasters (Salter & Odartey-Wellington, p. 580). For example, one may select CSI Miami from a menu of options well before one would select a new Canadian program or a community access show. Since on-demand television follows no set schedule, it also challenges the strict time periods mandated by the Canadian content regulations.

In 1996, Globe and Mail columnist Terence Corcoran wrote:

The technological revolution…effectively renders 99 per cent of Ottawa’s

telecom and broadcast regime irrelevant. …The main regulatory framework of

Canada’s broadcast industry – the Soviet-style content rules and the system of

broadcast licenses that protect industry participants – is rapidly becoming

unenforceable.

-T. Corcoran. The Globe and Mail. Nov. 23, 1996.

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Corcoran was wrong. There is no denying the potential of new digital technology to

radically transform the Canadian media landscape. It already has. However, the

CRTC has options. What remains to be seen is if the CRTC decision to maintain a largely market-based approach challenges traditional concerns of the public interest in

broadcasting. These issues will be further addressed in reference to specific CRTC

policy statements and decisions in chapters three and four.

2.4 Technology as Ideology

Changing technological infrastructure may indeed be forcing the hand of broadcast

regulators, but one must also be wary of those who use the argument of technological

change to advance a clear ideological agenda. For the extent of the digital era thus

far, that argument has meant a stronger position for the private sector in the media marketplace. Toronto-born, former FCC chair Mark Fowler wrote in 1982, long before challenges from the internet had appeared on anyone’s policy radar, that

“Technological plenty is forcing a widespread reconsideration of the role competition

can play in broadcast regulation” (Fowler and Brenner, 1982, p. 209). While it is true

that broadcasting was expanding from a three channel universe in the early 80s, it was clearly being used in this case as a technological Trojan horse, smuggling in

neoliberal assumptions about the benefits of competition in the media marketplace,

when one could just as easily say technology has increased the possibilities for public

service broadcasting in a multi-channel world. Fowler also famously elaborated on

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his view of the lack of necessity for regulation in the broadcasting world in the conservative journal Reason:

Television is just another appliance. It's a toaster with pictures. Let the people

decide through the marketplace mechanisms what they wish to see and hear.

Why is there this national obsession to tamper with this box of transistors and

tubes when we don't do the same for Time magazine?

-Mark Fowler, Interview in Reason magazine, 1 November 1981

Fowler is a key figure in the history of neoliberalism and the broadcast media. In his time as the Chair of the FCC, 1981-1987, Fowler oversaw the lifting of the requirement that stations had to devote a certain percentage of air time to public service broadcasts; allowed for children’s programs based upon toys; changed the broadcast license renewal process from three to five years, where most stations were granted renewal “by filling out a postcard and mailing it to Washington”; and rescinded the FCC's anti-trafficking regulation, which stated that a broadcaster had to operate a station for three years before selling the license (Boyer. The New York

Times, Jan.19, 1987). This last shift in policy resulted in the dramatic increase in media mergers and buyouts of the last two decades in the United States. Fowler set the deregulatory agenda which has echoed through the digital era.

According to some critics, a similar philosophy guided much of the regulation in the

UK during the same period. Nicolas Garnham observes that the drive to launch cable and satellite in Britain, “was fuelled, as openly admitted, by the needs of the

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corporate sector for enhanced communications facilities and the increasingly

desperate national search for a share of the international market in high technology products” (Garnham,1990, p. 118). Garnham goes on to add

…what we are in fact being offered is not a more socially responsive,

politically accountable, diverse mode of cultural interchange in the electronic

sphere, but on the contrary the expansion of price and profit, of commodity

exchange, as the dominating mode of organization in yet another area of

cultural production and consumption, as though this were a new phenomenon.

(N. Garnham, 1990, p. 120)

The idea of broadcasting as commodity gained traction in the country largely credited with creating the concept of public service broadcasting. In 1986, the Peacock

Commission, created by Margaret Thatcher to study broadcasting funding, considered advertising on the BBC – a proposition which would have been shocking mere years before.

As always the case for Canadian broadcasting, what happens in the United States and the UK has repercussions within the Canadian sphere. The digital era in Canada has been witness to a vast expansion of the private broadcasting sector, assisted by sharp government cuts to the public broadcaster and a regulatory environment increasingly reliant upon market forces. Marc Raboy and Genevieve Bonin note of the CRTC,

“Somewhere along the way, it became an enabling mechanism for capital

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accumulation” (Raboy and Bonin, 2008, p. 61). This overarching global consensus

regarding market mechanisms is the second key hegemonic pillar of the digital era.

2.5 The Rise of Neoliberalism

…there has developed in Canada a strong concern that increasing government regulation might be having serious adverse effects on the efficiency of Canadian firms and industries and on the allocation of resources and distribution of income. -Pierre Trudeau. 1978. Letter to the Chairman of the Economic Council of Canada. (Canada: 1979, p. 151)

It is a common misconception that the rise of neoliberalism in communication policy was the exclusive product of conservative ideologues in the 1980s under the regimes of Ronald Reagan in the U.S., Margaret Thatcher in the UK, and the Progressive

Conservative government of Brian Mulroney in Canada. The historical facts speak otherwise. Across the political spectrum there was a surprising consensus around the issue of deregulation in broadcasting. The issue had been gaining traction in policy circles well before the Reagan-Thatcher-Mulroney administrations. In the United

States, Robert Horwitz notes it was a Carter appointee, Charles Ferris, who began the process of turning the regulatory focus away from protecting the incumbent broadcasting industry (Horwitz, 1989). This would lead to the break-up of the AT&T monopoly – an event Horwitz calls “the single most important event in the deregulation of American industry” (p. 5). In the United States, the calls for deregulation in the communications industry came from both sides of the political

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spectrum: conservatives who demanded a more pro-free market approach and liberal

groups who voiced concerns over regulatory capture and had little faith in the regulatory institutions. Neoliberalism is simply as Robert McChesney observed: “the

defining political economic paradigm of our time” (quoted in Freedman, p. 37).

In Canada, a 1981 Report from the Economic Council of Canada entitled Reforming

Regulation, assumed a tone which would be echoed by neoliberal advocates in the

years to come:

…one of the most important consequences of the technological thrust in

telecommunications has been a reassessment of the economic rationale for

much of the regulation in this industry. (Economic Council of Canada, 1981)

It was into this atmosphere of lessening of regulatory standards and increased role of

the private sector that the digital television revolution in Canada was launched. There

is not any one regulatory decision, nor the overwhelming influence of a key

individual that led to this change in policy which saw the CRTC alter its role from

guiding organization to facilitator between industries. The disputes in the 1980s

between the government and the CRTC had challenged the power of the public

regulator and as that decade ended, the political movement against public institutions

had gained momentum not just in Canada but around much of the industrialized

world. Neoliberal economic philosophy was largely on the fringes of mainstream

economic thought for the decades immediately following World War II; however,

these free market views gained increasing traction in the late 70s and early 80s, and

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by the 1990s, the key era of development for digital television, neoliberalism was

comfortably ensconced in power centres throughout North America and Europe. By

the turn of the 21st century, communications scholars identify “neoliberal pressures as

a key feature of today’s media environment that shape everything from the role of the

state to the character of the content produced” (Freedman, 2002, p. 47).

Political economy is always informed via the use of history. This section of the dissertation is structured to recognize the impact of the last decades of economic philosophy on the overall policy structure of the digital television revolution. There

is no pretence of being exhaustive in examining the writing of key figures; however,

there is an effort to establish the connection between dominant economic philosophy

and the general direction of broadcasting policy in the post-war period. Canada did

not invent digital television nor did it create the economic and political climate into

which it was launched – these were more global in scope, but the impact is felt in

Canadian living rooms. To fully grasp the policy of the digital television transition,

one must incorporate the prevailing political and economic climate of the period.

Perhaps more than the technology itself, it is this surrounding power dynamic which

shapes the transition from analogue to digital broadcasting in Canada.

The theoretical and historical root of neoliberal economics is generally attributed to

Scottish political economist Adam Smith and his canonical five-book work The

Wealth of Nations, originally published in 1776. Smith links the classical liberal

values of personal liberty and freedom with the free flow of goods and trade. A

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common metaphor attributed to Smith is that of the “invisible hand” of the

marketplace (though his original use is not quite the same as its modern usage): that

of a completely objective set of principles and self-regulating forces producing

marketplace equilibrium (see Smith, 1997b, p. 32). The Wealth of Nations’ core

principles of the benefits of unrestricted trade, coupled with a limited role for the

state, provide much of the historical foundation for the academic and political project

of neoliberalism. Smith writes:

We trust with perfect security that the freedom of trade, without any attention

from government, will always supply us with the wine which we have

occasion for: and we may trust with equal security that it will always supply

us with all the gold and silver which we can afford to purchase or to employ,

either in circulating our commodities, or in other uses. (Smith, 1997b, p. 11)

Such faith in market mechanisms made Adam Smith the patron saint of free market

enthusiasts worldwide. 18 In Canada, the free market think-tank the Fraser Institute

which counts former Conservative Ontario Premier Mike Harris and Reform Party

founder Preston Manning as fellows, offers Adam Smith neckties to new members.

The Fraser took a lead role in promoting the virtues of an idealized marketplace

within the unorthodox economics of Canadian broadcasting. In the 1980s, the Fraser

Institute followed the example of some American conservative organizations

18 Many Adam Smith disciples conveniently omit the following quote where he clearly outlines The Expenses of the Sovereign: “But in order to render that produce both as great and as valuable as possible, it is necessary to procure to it as extensive a market as possible, and consequently to establish the freest, the easiest, and the least expensive communication between all the different parts of the country…” (1997b: 318)

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(Accuracy in Media, the Centre for Media and Public Affairs) that fought against what they saw as a “liberal bias” in mainstream media (Taylor, 2004). Launched in

1987, for more than a decade, the Fraser Institute’s National Media Archive (NMA) was Canada’s only publicly available source for a regular content analysis of the two

Canadian English-language national television news broadcasters: CBC and CTV.

The findings of its studies were published in a monthly newsletter, On Balance, and frequently found fault with the work of the public broadcaster (Taylor, 2004). The

Fraser Institute has been credited with “playing an explicitly vanguard role in constructing neoliberal hegemony” within Canada (Carroll and Shaw, 2001, p. 202).

This well-funded and politically connected organization made a concerted effort to restrict government’s role in broadcasting during the period immediately preceding the initial studies of digital television in Canada.

South of the border, neoliberal principles had advocates decades earlier, but garnered mainstream recognition in the 1980s. Adam Smith’s influence was also pronounced in the work of University of Chicago Economics professor Milton Friedman, whose calls for a return to Adam Smith-style 18th century economic liberalism (hence:

“neoliberalism”) found increasingly influential audiences after many of his key studies were published in the early 1960s. In his seminal work, Capitalism and

Freedom, Friedman observes

The kind of economic organization that provides economic freedom directly,

namely, competitive capitalism, also promotes political freedom because it

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separates economic power from political power and in this way enables the

one to offset the other. (Friedman, 2002, p. 9)

After years of post-Depression Keynesian economics, where the state assumed an active role in macro-economic planning, neoliberalism brought the marketplace’s invisible hand once more to the public eye (Friedman, 2002). This was a decided shift from earlier 20th century philosophy of economists like Canadian-born John

Kenneth Galbraith, who had served as an advisor to Franklin D. Roosevelt, Harry S.

Truman, John F. Kennedy and Lyndon Johnson. In his popular 1958 book, The

Affluent Society, Galbraith called on Americans to eliminate the poverty which he

saw as inexcusable in a society of plenty. To do so called for public investment in

helping the children of the poor via good schools, health care, nutrition programs and

recreation facilities – the very same approach Margaret Thatcher would later ridicule as symptomatic of the “nanny state” (Galbraith, 1958, p. 256). This same prevailing attitude could be found in Kennedy FCC appointee Newton Minow, who was equally as clear that private sector broadcasters had strong public service obligations (Minow,

1961). As the digital era approached, economists like Galbraith found themselves increasingly marginalized as another group of economic thinkers challenged the

worth of public institutions and found a receptive audience in key political circles.

In 1976, Milton Friedman won the Nobel Prize for Economics, and from 1977 to

2006 served as a senior research fellow at the influential Hoover Institution. Like

Galbraith before him, Milton Friedman’s economic philosophy was influential at the

highest levels of American policy. In 1981 he was appointed as a member of

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President Ronald Reagan's Economic Policy Advisory Board. His economic

philosophy has echoed in the decades since. In a 2008 New York Times Magazine

article, David Leonhardt writes.

…For three decades now, the American economy has been in what the

historian Sean Wilentz calls the Age of Reagan. The government has

deregulated industries, opened the economy more to market forces and, above

all, cut income taxes. (Leonhardt, 2008)

The Age of Reagan was more accurately the age where neoliberal philosophy came to

fruition. Although the President was indeed the key figurehead, it was Milton

Freidman, and other neoliberal economists, whose work provided one of the central

pillars for the Age of Reagan, an age from which the world in 2009 is now bidding a

hasty retreat amid collapsing economies and self-regulatory economic measures

which decidedly did not work. Once again the President’s selection to chair the

FCC, Mark Fowler, shared the overall philosophy of one of the President’s top

economic advisors and brought in a series of measures to allow for greater market

control in the American media.

Despite a seeming historical incompatibility, broadcasting was not spared from

Friedman’s call for a return to values of the 18th and early 19th century.19 According

to Friedman, a classical liberal government

19 John Kenneth Galbraith noted of the incompatibility of the media and 19th century economics: “Few people at the beginning of the 19th century needed an adman to tell them what they wanted” (Galbraith, 1958, p. 14).

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…would refrain from a host of activities that are now undertaken by federal

and state governments in the United States and their counterparts in other

Western countries. …one which deserves special mention because of its

implicit censorship and violation of free speech, is the control of radio and

television by the Federal Communications Commission. (Friedman, 2002, p.

34-35)

Friedman continued further along this theme in an introduction he wrote for the 1994

edition of Friedrich Hayek’s The Road to Serfdom:

Why is it that intellectual classes everywhere almost automatically range

themselves on the side of collectivism – even while chanting individualist

slogans – and denigrate and revile capitalism? Why is it the mass media are

almost everywhere dominated by this view? (in Hayek, p. 262)

Friedrich Hayek is another key figure in the rise of neoliberalism in the later part of

the 20th century, though much of his work was written decades before that of

Friedman. Milton Friedman cites Hayek as one of the “Philosophical Radicals” whose “penetrating analysis” was influential in developing his belief in “economic freedom as a means toward political freedom” (Friedman, 2002, p. 11). Hayek believed that collective action, despite all good intentions, would inevitably lead to socialism and/or Nazism (two ideologies Hayek saw as inextricably connected).

Democracy, he wrote, would destroy itself “when it becomes dominated by a

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collectivist creed” (2007, p. 110). Hayek steadfastly opposed to such common collectivist concepts as the public interest:

The “social goal,” or “common purpose” for which society is said to be

organized is usually vaguely described as the “common good,” the “general

welfare,” or the “general interest.” It does not need much further reflection to

see that these terms have no sufficiently definite meaning to determine a

particular course of action. (Hayek, 2007, p. 100)

Thus, the concept of the public interest, so essential since the earliest days of

broadcasting regulation, was deemed essentially irrelevant and perhaps even

dangerous by one of the most influential economic minds among those with access to

power in the formative years of the digital era. The tradition of the public interest

was explicitly challenged by the prevailing power dynamic. Some media scholars

have taken note of this seemingly irreconcilable difference between neoliberal

economics and broadcasting regulation. In Media and Power, James Curran correctly

observes, “…the central tenets of this legacy (neoliberal economics) are implicitly

opposed to the public service tradition” (Curran, 2002, p. 198). This view is echoed

by David Harvey:

Neoliberal theorists are, however, profoundly suspicious of democracy.

Governance by majority rule is seen as a potential threat to individual rights

and constitutional liberties. (Harvey, 2007, p. 66)

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Despite this divide in objectives, Hayek’s belief in the preference of markets to

regulation is clearly kept alive by key contemporary national and supranational

political bodies:

But the fact that we have to resort to the substitution of direct regulation by

authority where the conditions for the proper working of competition cannot

be created does not prove that we should suppress competition where it can be

made to function. (Hayek, 2007, p. 87)

That statement, originally written by Hayek near the end of World War Two, is eerily

similar to the following 2005 report from the Organization for Economic Co-

operation and Development Roundtable on Communications Convergence:

With the move towards convergence, regulators should rely more on market

forces than in the past. Markets often evolve more quickly than regulators can

act and this may highlight the need for regulators to move away from ex ante

towards ex post regulation. (OECD, 2005)

Clearly, the calls from economists like Friedman and Hayek for a return to classic liberalism had become the guiding principles of the last two decades. Closer to home, echoes of Hayek can be heard in the following 2007 speech excerpt by CRTC chair

Konrad von Finckenstein

We have a government that is very keen on less regulation, and that has

directed us to accept market forces as the default and regulation as the

exception. (von Finckenstein, 2007)

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In 1974, in Vancouver British Columbia, at the age of 75, Friedrich Hayek became

one of first advisors of the newly-formed Fraser Institute (Edge, p. 105). Thus a neoliberal post-war voice from Germany, championed by economic theorists in the

U.S. in the 1960s, helped structure a political movement in Canada in the 1970s. The global neoliberal movement clearly found receptive audiences within the Canadian establishment, and in particular in an organization which was to be a leading voice in the call for lessening regulation in Canadian broadcasting.

2.6 Neoliberalism and Canadian Broadcasting Regulation in the Digital Era

There is no exact moment when neoliberal philosophy is explicitly embraced in

Canadian media policy; however, a clear trajectory is established during the 1980s, in

particular in the switch from the Liberal government of Pierre Trudeau to the

Progressive Conservative majority government of Brian Mulroney. The change in regulation is perhaps most pronounced in the great political shift in attitude toward

ownership concentration in Canadian media. In the early 1980s, the Royal

Commission on Newspapers (Kent Commission) released a report which called for strict limits to be placed upon cross-ownership in Canadian media. The report concluded:

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Common ownership of different media in one community is clearly a

restriction on competition, a lessening of the diversity of voices providing

information and expressing opinion. (Canada, 1981, pp. 229-230)

In the final years of the Trudeau era, the government responded to the Kent report by

issuing a policy directive to the CRTC, instructing the regulator to deny broadcasting

licenses to any owner of a daily newspaper in a single market. The directive’s stated

purpose was

…to ensure that, with certain exceptions, enterprises engaged in the

publication of daily newspapers shall be prohibited from owning or

controlling broadcasting undertakings in the same market area for the general

purpose of fostering independent, competitive and diverse sources of news

and viewpoints within Canada. (PC0 2294, 1982)

This would prove to be a last gasp in the effort to curtail media industry consolidation

in Canada for the next 25 years.20 The Progressive Conservative government of

Brian Mulroney was elected in 1984 and promptly rescinded the Trudeau

government’s order the next year. The repercussions were soon felt in a media

marketplace free of government ownership restrictions. The second major policy

support mechanism for media corporate convergence came in 1996 when the

Government of Canada announced its Convergence Policy, which declared that all

20 The next such restriction would be the 2008 Diversity of Voices announcement that no single company can own television, radio and newspapers in a given market, and no company can own more than 45% of the total television audience in Canada. (CRTC 2008-4)

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telecommunications carriers that meet the Canadian ownership and control

requirements would become eligible to hold broadcasting licences (Canada, 1996).

This was a reversal of the June 1985 Direction to the CRTC (Ineligibility to Hold

Broadcasting Licences), in which the Federal Government had prohibited the

granting of licenses to telecom providers. In quick succession, a series of industry mergers occurred. The greater policy sphere in Canada had obviously warmed to an increased role for the private sector.

Though there are numerous examples, the situation in Quebec provides a clear illustration of the path of media ownership in a system adhering to neoliberal orthodoxy. In 1987 the CRTC approved the sale of Télé-Métropole, Quebec’s most profitable privately-owned station (flagship of the TVA network), to cable powerhouse Vidéotron. Marc Raboy heralds this decision as creating “a new model of corporate concentration – the fully integrated video supermarket” and notes that it was “insidious in its implications for democratic communications” (Raboy, 1990, pp.

314-315). This transaction announced the arrival of major industrial concentration in

Canadian media, which has ebbed and flowed but continued largely unabated in the digital era. In 2001, Vidéotron was purchased by Quebecor for $5 billion, giving

Quebecor unprecedented media presence in the province. Two companies, Québecor and Gesca, a subsidiary of Power Corporation, own a combined 97% of French- language daily newspapers in Quebec (Sénécal, Dubois, 2005).

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The 1996 order opened the door and Bell Canada quickly expanded into broadcasting via the launch of the DTH satellite ExpressVu in 1999 and a year later put forth a

successful bid to assume control of CTV, Canada’s largest private network, and later

the Globe and Mail, Canada’s national newspaper.21 Other major Canadian mergers

of the digital era which blurred the lines between previously distinct media include

Canwest Global’s expansion as a national network and its purchase of the National

Post newspaper from Conrad Black, and later Alliance-Atlantis; and Rogers

acquisition of the City TV stations in Toronto, Winnipeg, Edmonton, Calgary and

Vancouver. The corporate convergence of the digital era has led to Canada having

one of the highest concentrations of media ownership among the industrialized

nations, according to the group Campaign for Democratic Media

(http://democraticmedia.ca/).

It is necessary to again observe the policy/regulation distinction. Both the 1985 Order

from the Mulroney government and the 1996 Convergence Policy were government

directives which set the policy agenda the CRTC was expected to follow. The CRTC

still could exercise some regulatory authority in implementing the objectives of the

1991 Broadcasting Act but clearly the driving force for allowing greater media

consolidation was coming from higher levels of government. The government itself

was feeling pressure from supranational agreements such as the North American Free

Trade Agreement. Cultural industries were exempt from NAFTA, though noted

Canadian communications lawyer Peter Grant has written, “Washington has since

21 Bell has since retreated from much of the world of broadcasting and print, selling off much of its recently acquired properties. BellGlobeMedia became CTVGlobeMedia in 2007.

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insisted that the Canadian precedent was misconceived and it will never again accede to an exemption in any future free-trade agreements” (Grant and Wood, p. 362). The

Canadian government played an active role in pushing the CRTC to allow for greater convergence.

The CRTC is not alone in allowing for increased consolidation and the Canadian case is not necessarily unique. The 1987 Caplan-Sauvageau study noted, “In Europe, the trend is toward privatization”, exemplified by changes such as when the government of France privatized the public channel TF1 (Canada, 1987, p. 25). In the United

States, the Telecommunications Act of 1996 deregulated radio ownership rules and opened the door to an enormous wave of industry consolidation, clearing the way for radio behemoths such as Clear Channel. In what Matthew Fraser calls, “…a straightforward Me-Too tactic”, the CRTC announced in 1998 that radio owners would be allowed more than one station in a market (Fraser, 1999, p. 163).

In essence, the CRTC was following the global regulatory fashion. Edwin Baker observes, “In the last decades of the twentieth century, deregulation of the media (and much else) became a global phenomenon” (Baker, p. 3). There continues to be concern among industrialized nations that undue regulation restricts innovation in an increasingly competitive and lucrative sector of the economy. The broadcasting industry within Canada was able to convince the regulator that increased size was necessary in order to compete with global players, even though the Canadian media system - via foreign ownership restrictions, exclusivity of licenses, and simultaneous

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substitution of Canadian advertising onto foreign (American) signals, among other

regulations - largely shields them from the true jungle of the global media

marketplace.

Conclusion:

Thus, regulation in the digital era finds itself restricted by two primary forces: a

technological revolution which has been thrust upon the system; and a set of guiding

neoliberal economic principles which the regulator and the greater Canadian state

have chosen to accept and adopt in policy and regulation.

…the Commission’s goal has been to oversee the development of a

framework that will ensure an orderly transition from the current highly

structured technological and regulatory environment to an environment

characterized by a more market-driven approach. (CRTC 2006a; see also

CRTC 2003-61; 2002-31)

Indeed, as Salter & Odartey-Wellington observe, “the CRTC is about as pro-market as it is possible to be and still be a regulator” (2008, p. 779). To be fair, the CRTC is largely following a global trend: neoliberal ideology was a well-entrenched global fact by the tabling of the 1991 Broadcasting Act and continued to grow until the economic downturn of 2008. In the decade preceding the 1991 Act, all liberal

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democracies experienced growth in the relative share of the private sector in broadcasting (Canada, 1987, p. 25).

There was certainly research which supported an increased role of the private sector.

A 2006 broadcasting regulation study from the Hans Bredow Institute in Hamburg,

Germany lends support to the privatization theory: “traditional regulation does not seem to stimulate creative activities effectively. Initiatives, innovation and commitment cannot be imposed by law” (Hans Bredow, 2006, p. 13). The Canadian example questions whether the private sector is always the superior vehicle for achieving innovation.

Though they maintain a constant influence, the two pressures of changing technology and free-market economic principles clearly intersect around the issue of digital television in Canada. This technological leap did not sneak up on anyone - advances in digital television technology have been clearly visible on the broadcasting horizon for more than two decades. The CRTC made the key regulatory decision to forgo regulatory guidance or framework and instead allow the transition to these technologies to be largely dictated by market forces. The private sector has been allowed to lead and the result has hardly been one of activity and innovation.

Michael McEwen, in a report commissioned by the CRTC, offered the following critique :

Broadcasters have said repeatedly they do not see the value of building out

digital transmission facilities across the country and going through the

expense of simultaneous carriage of analogue and digital systems, particularly

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when most of their markets are delivered by cable and to a lesser extent

satellite. (McEwen, 2006, pp. 44-45)

In short, McEwen believes the private sector had no incentive to create a long term plan. This sentiment was echoed in the 2007 Dunbar-Leblanc Report, also commi ssioned by the CRTC:

Canada is in need of a national policy for digital media, and needs to have

available all of the tools of government to give effect to it

(Dunbar & Leblanc, 2007).

Offering a critique of neoliberal economic policy is certainly not a rare position in communication scholarship. As noted by Jan van Cuilenburg and Denis McQuail traditionally, what we refer to as ‘media policy’ is still directed toward political welfare goals (van Cuilenburg and McQuail, 2003, p. 186). So it is perhaps to be expected that the views of a Keynesian-era economist like John Kenneth Galbraith would seem more palatable to a media policy scholar than the fierce individualism of

Hayek and Friedman. As Robert Horwitz writes, “Traditional theories of regulation invariably centre themselves around a concept of the ‘public interest’ which is rooted in welfare economics” (Horwitz ,1989, p. 22). For Hayek, Friedman and their regulatory disciples like Mark Fowler, there is no divide between personal wants and the public good, with welfare little more than a policy mistake.

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This chapter has noted the ubiquity of increased private sector involvement in global media; however, there is a danger in regarding neoliberalism as a monolithic force.

This view is misleading in two key ways: 1) it downplays the active role of the state in the adoption of free market principles; 2) it does not recognize that neoliberalism is often interpreted within a local context.

Despite the wave of privatization in broadcasting in the digital era, the state has never withdrawn from media regulation; indeed the decisions made to move government out of broadcasting were clearly political processes. In the Canadian context, many companies in the thriving private media sector have gained wealth because of, not despite, regulation. The state has never become disengaged from policymaking in broadcasting and that is why critics like Des Freedman employ the term “re- regulation” as a more appropriate description of the means of achieving policy objectives in the face of market imperatives (Freedman, 2008, p. 49; also McChesney,

2007).22 In certain instances, the state has chosen to take itself out of the greater system.

Economists such as Robert Boyer and Alain Lipietz (member of what became known as the French Regulation School in the 1980s), stress that advanced capitalism has not evolved uniformly across the globe. While the crisis in central Fordism did result in the centre moving out to the periphery, “it must be stressed that the ‘needs’ of the centre do not determine what happens in every peripheral territory” (Lipietz, p. 39).

22 Henry Geller effectively argues the licencing renewal process in the U.S. was deregulated under Mark Fowler in the 1980s when he introduced the ‘postcard renewal’ process for incumbent broadcasters (Geller, p. 549)

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Undisputedly, the digital era has seen a growth in the private sector, and yes, the United

States is the world leader in cultural products; however, that is not to say the U.S.

dictates how policy must be designed for each region. For example, the UK has

undergone repeated threats to privatize the BBC, but it simply has not happened. In fact, the neoliberal-sympathetic government of Tony Blair extended the charter of the BBC in

2007, demonstrating a faith in public broadcasting which must have certainly been

puzzling to his neoliberal ally, George W. Bush. Once again, the role of local

institutions have clear consequences principally at the microeconomic or intermediate

levels (Boyer, 1990).

Likewise, on the issue of the role of technology, academics must not allow

themselves to become entrenched into a strict orthodoxy. In the 2006 collection The

Economics of Mass Media UK Communications scholar Peter Goodwin observes:

“Political economists of the media should be wary of being boxed into the role of

professional cynics on the question of new technology” (Doyle ed., p. 176).

Certainly, overriding policy objectives often remain the same as in previous eras, but

that does not limit the profound challenges posed by the new technology.

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Chapter Three: Policy Statements - the Digital Television Transition

The central role of the Canadian Radio-Television and Telecommunications

Commission with respect to broadcasting has remained constant since the regulator was created in 1968. Not a single word changed in the paragraph describing the objectives of the CRTC in twenty-three years between the 1968 and 1991

Broadcasting Acts:

the Commission shall regulate and supervise all aspects of the Canadian

broadcasting system with a view to implementing the broadcasting policy

(stated earlier in the Act) (Canada 1968, 15; 1991, 5.1).

The powers of the current CRTC are extensive, subject to the parameters outlined in

the Broadcasting Act, and infrequently-issued directives from the federal cabinet.23

Despite these restrictions, the 2007 Dunbar-Leblanc report notes the “broad statutory

mandate of t he CRTC” (1), and also observes:

Notwithstanding the large number of statutory policy objectives in subsection

3(1) and their specificity, the Broadcasting Act confers a significant amount of

discretion on the CRTC with respect to how it goes about the job of regulating

and supervising the Canadian broadcasting system (21).

23 There have been eight such directions from the Governor in Council to the CRTC between 1970 and 2006 (Grant, Lafontaine, Buchanan, p. 117).

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In its enforcement of the policy objectives stated in section three of the Act, the

CRTC has several tools at its disposal. The regulations of the CRTC are legally binding; however, the CRTC also has within its legal mandate under the 1991

Broadcasting Act to

…issue guidelines and statements with respect to any matter within its

jurisdiction under this Act, but no such guidelines or statements issued by the

Commission are binding on the Commission. (1991 Broadcasting Act, 6)

This statement did not appear in the previous 1968 Broadcasting Act. The CRTC began the practice of issuing policy statements even before it was enshrined in legislation, believing this assisted in the regulatory process. The 2008 Canadian

Broadcasting Regulatory Handbook elaborates upon the history of this addition to the

Act and notes that the practice of the CRTC issuing policy statements has been

“upheld and applauded” by the Supreme Court of Canada. In the 1978 case of

Capital Cities Communications Inc. et al. v. CRTC et al., Chief Justice Bora Laskin stated

…it was eminently proper that it (CRTC) lay down guidelines from time to

time as it did in respect to cable television…An overall policy is demanded in

the interests of prospective licensees and of the public under such a regulatory

regime as is set up by the Broadcasting Act.

(Grant, Lafontaine, Buchanan, p. 29).

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Since the policy statements are not obligatory, it allows the CRTC the leeway to grant

exemptions from certain policies and later change the policy as it sees fit. The fact

these policy statements are not legally binding should in no way diminish their

significance. In many ways, these statements set the agenda which the entire industry

is wise to follow. As Salter & Odartey-Wellington observe, these policy statements

“outline the rules of the game for everyone” (p.155). Just as policy announcements

are not legally binding on the Commission or industry, neither can they be appealed

to, or overturned by, the federal Cabinet (unlike licensing decisions as specified in

section 34(4) of the Broadcasting Act). They alert the industry to how the regulator sees the system evolving. CRTC policy guidelines and statements are frequently posted in public notices and circulars distributed to industry and media and found on

the CRTC website.

Industry can expect to see policy announcements become law when they are found in

later regulatory decisions, sometimes called “determinations”, and conditions of

licence. In that sense, policy announcements act as early warning signals for the

broadcasting industry. In the book, The CRTC and Broadcasting Regulation in

Canada, Salter & Odartey-Wellington observe that “regulation” is a more general

phenomenon, whereas “regulations” are usually very specific (Salter & Odartey-

Wellington, p. 8). The expressed policies of the CRTC “usually give rise to

regulations…. Regulations are rules, not guidelines” (Salter & Odartey-Wellington,

p. 157). This is where the public regulatory institution of the CRTC becomes a quasi-

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judicial body – regulations are law. Policy statements are a vital part of the regulatory process, but they are not regulations.

Policy and regulations are quite different regulatory instruments; however, it is difficult to establish a hard and fast division between policy and regulations by the type of announcement issued by the CRTC. Releases which are categorized as policy frameworks generally do not contain new regulations; whereas a regulatory framework and regulatory policy are more generic titles and can often involve policy announcements as well as regulations (Peter Foster, CRTC director general of television policy and applications, personal interview, May 4, 2009). With the exception of notices clearly marked as “determinations”, which always involve regulation decisions, often one must read the notice to determine whether it is policy or regulations.

The policy-making process is also an opportunity for public input before the finality of regulations. The CRTC will regularly issue a public call for comments before, or sometimes when, a policy statement is issued. These policy hearings serve as a dialogue between regulator, industry and the public. For example, the Policy

Framework for Canadian Television (CRTC 1999-97) was preceded by Public Notice

CRTC 1998-44, issued 6 May 1998, announcing that the Commission would undertake a review of its policies relating to privately owned television broadcasters.

The CRTC received 350 written submissions following the public notice and 99 presentations were made at the hearing in September 1998 (CRTC 1999-97). There were also public consultations held throughout the country in May and June of 1998.

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Not all policy announcements are preceded by such a thorough public forum,

however Marc Raboy has noted of Canadian communications “no major change to

the system can be instituted, or even seriously contemplated, without public

consultation” (1995a, p. 455). The next two chapters will seek to determine if this

tradition of consultation has been upheld in the digital television transition.

This dissertation looks to establish the consistency between the CRTC’s policy

announcements and the industry laws it creates via binding regulations and conditions

of license. Do the formal decisions of the CRTC match the rhetoric of its policy

statements? This chapter will focus on the policy announcements of the CRTC

surrounding the transition to digital television in Canada and ask: what does the

CRTC believe is the appropriate position of regulations in this evolving environment?

In order to fully grasp the policy challenge of the digital television transition, it is

important to establish the scope of this project and examine the trajectory established

by early commissioned studies in the field.

While there has been no shortage of hyperbole to describe the change from analogue

to digital television, much of it is indeed warranted. The digital television transition is

a massive undertaking which involves a new policy paradigm for over-the-air (OTA)

broadcasters, distributors (BDUs), pay and specialty channels, as well as the

introduction of high definition (HD) into the greater broadcasting system - often the requisite regulatory decisions involves a combination of these interconnecting

industries. There will inevitably be more developments as the Canadian analogue

switch-off date of August 31, 2011 approaches. This shift exemplifies many of the

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greater changes in policy in the post-1991 Broadcasting Act era: a faith in market mechanisms, light-touch regulations, co-regulatory approaches, and the powerful influence of new technologies. Digital television offers a very large window into the

policy process surrounding a profound and current structural change in Canadian

broadcasting.

The transition is also still a work in progress. New challenges seem to unfold on a weekly basis and there are major regulatory reassessments and licence renewals in this area planned for 2009-2010. This chapter will restrict its analysis to events and announcements between 1991 and 2008.

The digital transition offers a relevant and timely comparative analysis, primarily

with the United States and Europe (the broadcasting systems against which Canada is

often judged), as all developed nations are currently adjusting their broadcasting

systems to a digital format. There is virtually no debate as to the superior quality and

spectral efficiency of the digital paradigm.24 As demonstrated in chapter two, Canada

is largely following the American lead in the digital switchover. Such a wait-and-see

approach is not uncommon in Canada’s broadcasting history and likely prudent given

Canada’s strong media connections to the United States; however there are revealing

elements of the Canadian policy approach which differ from the American template.

24 It should be noted that UK scholar Des Freedman believes the essential question “why digital?” has rarely been asked (Freedman, 2008, p. 171).

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The digital television transition is also a clear demonstration of the central role of

policy in broadcasting, as there has been very little by way of binding regulations by

the CRTC. The position of regulations becomes conspicuous by their absence.

The change from analogue to digital television has been championed in 1997 by then-

Vice President Al Gore as

the greatest transformation in television’s history...one that is truly bigger

than the shift from black and white to color....It’s like the difference between a

one-man band and a symphony…(Advisory Committee…, p.1)

This significant shift has also provided opportunity for a fundamental reassessment of

the public interest objectives of the broadcasting system. The leap in spectrum

availability offers a unique moment to strengthen both industrial and public interests.

As American Communications scholar Philip Napoli observes, “…digital television’s

potential contribution to the public interest provides the most compelling rationale for

moving forward with the transition” (2003, p. 155). The normative goal of the public interest remains central for the purposes of this dissertation and its relation to the digital television transition in Canada raises key questions:

 Is CRTC policy thus far in the digital television transition indicative of an

effort to strengthen public interest objectives?

 How is the Canadian regulator utilizing the broad mandate it holds under the

1991 Broadcasting Act?

3.1 Early Studies: United States and Canada

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The digital television transition has been a concern at the highest levels of

government in the United States since the mid 1990s. The 1996 Telecommunications

Act presented the first legislative framework for the digital transition and put the

industrial and political process in motion. The Act included a new section entitled

Broadcast Spectrum Flexibility (Section 336) which outlined the use of new

“advanced television services” and set the stage for the spectrum auctions which

followed ten years later. This new law doubled the spectrum space allotted to most

broadcasters for the duration of the digital transition but mandated that previously

held analogue spectrum space eventually “be surrendered to the Commission for

reallocation or reassignment (or both) pursuant to Commission regulation” (1996

Telecommunications Act, 336.c).

With the American digital rollout now underway, Canada faced the prospect of

following suit or falling behind. The reaction of the two nations reveals much about

their respective political cultures and in particular the place of regulations and

political guidance in such a fundamental development in communication

infrastructure. The split between the U.S. and Canadian approaches becomes clear

immediately from the launch of initial government investigations into the challenges

posed by the digital television transition.

President Bill Clinton established the Advisory Committee on the Public Interest

Obligations of Digital Television Broadcasters, or PIAC (Public Interest Advisory

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Committee), on March 11, 1997. The President charged the Advisory Committee with

determining how public interest would best be served in the television environment

created by the U.S. Telecommunications Act of 1996, which made digital spectrum

space available for all analogue license holders, a simulcast period when analogue

and digital would be available, and an analogue switch off (ASO) date proposed for

2006. Specifically, the President requested that the Advisory Committee advise Vice

President Gore on the public interest obligations of digital television broadcasters as this new transmission technology replaced existing analog broadcasting techniques.

The Committee was comprised of 25 members, including representatives of industry,

public broadcasting, academics, native groups, children’s television advocates, and

others. The Committee’s report, Charting the Digital Broadcasting Future, was

tabled on December 18, 1998.

The report was extensive (160 pages) and forthright in its assertion that public interest

objectives and the role of government regulations were still applicable in the digital

environment:

It is important to help affirmatively shape the new digital television era, in

concert with market forces and the technology itself, by recommending

appropriate legal obligations and marketplace rules.

(Advisory Committee…:1)

A key point is the desire to “affirmatively shape” – to give structure to the digital era

using the policy tools the FCC, and not simply allowing for a marketplace solution.

The authors of the report emphatically endorsed the position that “people are citizens

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as well as consumers” (p. 134). The report echoed a position taken in the landmark

Red Lion Broadcasting vs FCC U.S. Supreme Court decision of 1969 which upheld

the constitutionality of the public interest standard in American broadcasting: “It is

the right of the viewers and listeners, not the right of the broadcasters, which is

paramount...” (p. 26).

The Committee urged the FCC to utilize the extra programming potential of digital

television to improve the quality of political discourse in the United States, including

a controversial recommendation that politicians should be allowed five minutes of

free air time each night in the 30 days previous to an election (p. 56). As Philip

Napoli writes, the report “represented an important starting point for a meaningful

examination and reassessment of how broadcast television could better contribute to

American political and cultural life” (2003, p. 154).

The impact of the report resonated in Washington corridors of power for years and

did indeed spark a reassessment of broadcasters’ public contributions. The report

prompted an FCC inquiry on digital broadcasters’ public interest obligations (FCC,

1999). However, the FCC has never officially responded to this Notice of Inquiry.

According to Philip Napoli, much of this public interest movement was undercut by

the change to the Republican administration of George W. Bush and his selection of

Michael Powell as chair of the FCC in 2001(Napoli, 2003, p. 154).25 The emphasis

switched to more practical, industrial issues such as building televisions with digital

25 It should be noted that, as an FCC Commissioner, Michael Powell wrote that he agreed with the 1999 Notice of Inquiry (see FCC 1999, Concurring Statement of Commissioner Michael K. Powell) .

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receivers, reaching ASO deadlines, and less upon normative debates concerning the public interest and the digital transition.

Perhaps fuelled by the popular, and ultimately successful, uprising against an FCC proposal to relax media ownership rules in 2003, dubbed by Robert McChesney as the “Moment of Truth” for American media advocates (McChesney, 2007, p. 153),

American civil society groups persisted in their demands for public interest obligations in digital broadcasting and won some concessions. In particular the FCC placed conditions upon digital broadcasters to provide programming for children and offer information for parents as to which programs are appropriate for young viewers

(FCC, 2004). There was nothing controversial in these measures – the paucity of quality television programming for children in America is a popular political issue dating back to the Kennedy era (see Minow, 1961) and is unlikely to find opposition in either party in Congress.

However, despite this regulatory olive branch, the outcry for public interest in

American broadcasting never fully subsided and once again flared up and intensified as civil society groups continued pressure. In 2005, the Benton Foundation, a public interest advocacy group funded by the Ford Foundation, published its Citizen’s Guide to the Public Interest Obligations of Digital Television Broadcasters, which observes

“As new technology innovations unlock new potential, policymakers must not lose sight of the goal on the horizon – ensuring that America’s media choices serve the public’s growing and very real needs” (Benton, p. 19). The report lists dozens of civil society groups involved with the digital television policy struggle and urged broad public involvement.

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There was also debate within the FCC itself. In response to the inaction of the

regulator, the Consumer Advisory Committee of the FCC released a statement in

November of 2005 chastising the lack of progress:

Consumers deserve to know how broadcasters will serve their day-to-day

television needs – healthy programming for children, healthy programming

for our democracy, healthy programming for our communities, and as much

information about the TV that comes into our living rooms as the food that

comes into our kitchens.

The transition to digital television offers profound opportunity to improve

television broadcasters’ service to the public by enhancing the diversity of

viewpoints, promoting civic participation, expanding local and community

programming, and increasing children’s programming. (FCC, 2005)

In the U.S. political debate, the digital transition issue also found a strong public

interest advocate within the Republican Party. In the late 1990s, Republican Senator

and Presidential candidate Bob Dole fought, and ultimately lost, the political battle to

make broadcasters pay for their use of the public spectrum (Fraser, p. 155). In 2005,

another future Republican presidential candidate, Senator John McCain, took up the

cause of digital television and was blunt in his assessment of the transition at that

point. "The transition to digital television has been a grave disappointment for

American consumers and nothing short of a spectrum heist, for an indefinite period of

time, by television broadcasters” (McCain, 2002). McCain also championed the

Advisory Committee’s 1998 request for free air time to candidates and lobbied for a

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digital transition date of 2007, not 2009 (after the original 2006 deadline was

extended).

For McCain and other American politicians, the digital transition is a matter of

national security. In the United States, the issue of radio spectrum was linked to matters of national security following the release of the 9/11 Commission Report.

The Report notes the poor communication between emergency response units in the wake of the terrorist attacks and believes the increasingly congested U.S. spectrum space was partially to blame. The 9/11 Commission explicitly recommended

“Congress should support pending legislation which provides for the expedited and increased assignment of radio spectrum for public safety purposes” (National

Commission, p. 397). The digital transition, according to John McCain and the 9/11

Commission, is not only a matter of home entertainment and information, but a necessary step to freeing up spectrum capacity for emergency response units. Though this is not traditionally part of the discourse surrounding broadcasting public interest, it is nevertheless a matter still decidedly in the public realm and not confined to the more private interests of industry.

Despite the outcry from the Washington power elite and civil society groups, many critics remain unsatisfied with the level of public interest objectives achieved in the

U.S. digital television transition. The political action has not matched the rhetoric. In

2007, FCC Commissioner Jonathan Adelstein noted this policy disconnect in a

Congressional interview: “in order to maximize the benefits to the American people, the Commission needs to determine DTV broadcasters’ public interest obligations.

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This proceeding has been pending since 1999, and the Commission has failed to

produce final rules” (Adelstein, 2007).

While American politicians and civil society groups are still vigorously engaged in

the public interest battle, in Canada such a debate never really began. Despite the geographic, economic, technical and cultural closeness between the two nations, the

Canadian digital television switchover has taken a decidedly different road from the

United States, one which belies Canada’s traditional approach to the inherent publicness of broadcasting.

This CRTC disconnect between democratic scrutiny and the greater digital television transition was established early in the process. In 1995, a Canadian task force was created virtually in tandem with the American committee, though its structure, mission and conclusions were decidedly different. The Canadian committee did not have the same high-level launch, nor did it share the mandate to re-evaluate the role of broadcasting as an essential public good. In 1995, the Task Force on the

Implementation of Digital Television (Task Force) was charged by the Canadian government with proposing a roll-out plan for digital television in Canada. The Task

Force was chaired by former CBC executive Michael McEwen and consisted of overwhelmingly industry-based representatives. The brief report (47 pages including appendices), Canadian Television in the Digital Era, filed with the Minister of

Canadian Heritage and Industry Canada in October, 1997, was largely technical in nature. Among the 17 recommendations was a request from the Task Force for a time lag so that Canadian broadcasters would be 12-18 months behind the American

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switchover – a strategy designed to benefit industry in terms of the price of new hardware and the chance to learn from the mistakes of their American colleagues.

As the report (under)states, “We can reasonably expect bumps and detours along the way” (Canada, 1997, p. 12).

The period of transition between the American and Canadian ASO was not the only aspect of the plan designed to benefit the Task Force’s industry-based membership.

While the early American report sought to “shape” the digital era “in concert with market forces”, the Canadian Task Force made it clear that their primary concern “is the continuing financial health of Canadian television broadcasting system...” (p. 3).

Such has been the Canadian approach to the digital transition for most of the ensuing eleven years. Despite the decidedly pro-industry position of the report, the Task

Force also clearly upheld the objective of universal service within the system:

Basic television services that are freely and universally available over the air

are central to achieving the objectives of the Canadian broadcasting system.

This universality of access must be preserved in the emerging digital system.

(p. 35)

On the recommendation of this Task Force, a group was assembled to offer further advice and monitor progress as the digital switch progressed. Canadian DTV Inc

(CDTV) existed from 1999 to 2006 and, once again, was comprised entirely of industry representatives and chaired by Michael McEwen. CDTV was influential in the early years of the transition setting up test transmitters in cooperation with

Industry Canada (see Industry Canada, 2001). McEwen notes in a 2009 article published in the broadcasting industry trade journal, Broadcast Dialogue: “industry

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was in control of virtually all elements of the (digital television) transition, including the important element of timing” (McEwen, 2009, p. 8).

Outside of the official political arena, Canada civil society has also been relatively quiet on digital television. In a 2006 end-of-year piece, Globe and Mail journalist

Kate Taylor boldly predicted digital television would be “the single most important cultural issue the country will face in 2006” (K. Taylor, 2006). The continued silence on the issue over the next twelve months once again proves the inherent dangers of

New Year’s prognostication. While other issues such as digital copyright and internet neutrality have seen groundswells of Canadian popular support in this new century, the potentials of digital television have not captured the attention of Canadians in the same way. Ian Morrison, president of broadcasting lobby group the Friends of

Canadian Broadcasting has repeatedly stated in various interviews that Canada will not be prepared for the 2011 ASO. Otherwise, there has been a relatively weak civil society presence on this issue within Canada.

Whereas the United States has addressed the issue of public interest in digital broadcasting at the executive and legislative branches of government, as well as within the federal regulator itself; the Canadian experience has been one of obscure task forces and groups which few citizens have heard of, and a plan designed to protect industry interests first and foremost. When the Canadian government did issue an order to the CRTC in 2006 to publish a study which would be entitled The

Future Environment Facing the Canadian Broadcasting System, the phrase “public interest” never appears in the order, nor does it appear anywhere in the study.

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However, the Order in Council which instigated the study explicitly states “the

Government favours a smart regulatory approach that ensures effective and efficient

regulation focussed on results for Canadians” (CRTC, 2006, Appendix 2). The

“smart” approach is a clear reference to the 2004 study which called for regulation to

delegate to the market when possible (Canada, 2004). The message to the CRTC is

clear and the implications are restrictive: no extra regulatory burdens.26

In another key government publication, the extensive 2003 Standing Committee on

Canadian Heritage study, Our Cultural Sovereignty, also took a surprisingly

straightforward industry approach to the question of DTV. While the committee

examined the impact of the digital transition on the objectives of the Broadcasting

Act including issues such as privacy, Canadian content, and access, Our Cultural

Sovereignty never asked the key question of how digital migration might further the

goals of citizenship, as U.S. officials had explored. The only mention of the public

interest in the chapter dedicated to the digital transition was in relation to the necessity of standards in digital tuners (Canada, 2003, p. 438). Nevertheless, the

Heritag e Committee made it clear they believed the digital transition would require stronger regulatory oversight and a wider scope of voices:

RECOMMENDATION 12.1:

The Committee recommends that the responsible federal departments and

agencies develop a comprehensive plan for the digital transition in

26 In a 2007 speech, CRTC Konrad von Finckenstein calls for “smarter and lighter regulation with more free play for market forces” (von Finckenstein, 2007).

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conjunction with the broadcasting industry and related public, private and not-

for-profit stakeholders. (Canada, 2003, p. 442)

Like much of this report, no further action was taken on the recommendation. The required government response to the study was described by Clifford Lincoln in an interview as “a white wash” (Lincoln, personal interview, May 20, 2008); however, the second government response to the report did acknowledge “the transition is not going as fast as expected” (Canadian Heritage, p. 25).

Thus, the initial primary indicators for the Canadian system revealed a strong pro- industry position with little appetite for the greater democratic potentials of the new technology. It should come as little surprise given the historical period in which digital television was developed, that the prevailing orthodoxy of open markets and light government involvement would inform the process. What is surprising, given

Canada’s traditionally more pro-government political culture and stronger place of the public broadcaster within the greater broadcasting system, is that when it comes to the essential question of public interest obligations in digital television, the debate within the U.S. was far more robust.

The ensuing DTV policy announcements from the CRTC address the various facets of the digital transition and generally maintain the strong industry-based approach.

3.2 Pay and Specialty Services

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The last two decades have witnessed a steady decline in viewership for traditional

over-the-air broadcasters and growth in viewers and profitability for specialty

services. Growth in specialty and pay channels has far outpaced conventional

television. Between 2003 and 2007, private conventional OTA profitability grew at

an average of 1.4%, while Pay, Pay per View (PPV), Video on Demand (VOD), and specialty services during the same period witnessed growth of 9.7% (CRTC, 2008, p.

81). Pay, PPV, VOD and specialty service revenues were 52% of total television revenues in 2007 (CRTC, 2008, p. 111). In a spectacular 2007 expansion, CanWest

Global purchased Canadian media company Alliance Atlantis for $2.3 billion, primarily to access its extensive holdings in the specialty television market. Specialty channels are particularly coveted because they are able to receive a dual revenue stream: advertising revenue, just as OTA channels, plus a fee for carriage from

BDUs.27

Under digital broadcasting technology there is room for a much greater number of new broadcasters, both over-the-air and via BDUs. Since the 1990s, the CRTC has been obliged to provide policy direction on the issue of new entrants and the place of incumbents in the more spectrum-abundant world of digital specialty and pay channels, and like much in the Canadian digital switch, the regulator has deferred to markets. The key early digital television policy announcement from the CRTC for new pay and specialty channels was the Licensing framework policy for new digital pay and specialty services (CRTC 2000-6), which is significant for establishing

27 OTA broadcasters asked the CRTC for a similar fee for carriage from BDUs in 2006 but their case was rejected (see CRTC 2007-53)

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category one and category two licensing divisions in the emerging digital spectrum.

This announcement set the policy agenda for new entrants into the pay and specialty

market without establishing clear criteria for existing broadcasters. This decision truly

brought the free market to bear on an emerging section of the Canadian broadcasting

system, with decidedly mixed results.

Under the proposed framework, category one retains the traditional protections (genre

limitations) and obligations (Canadian content) of the Canadian system; whereas category two channels are free of regulatory commitments, including genre protection

(there can be numerous channels offering similar programming) and, perhaps more importantly, the obligation to be carried by a BDU. Category two digital channels are left to fend for themselves in the marketplace and must negotiate their own distribution agreements with BDUs. Some category two stations fail to reach an agreement with BDUs and as such are never distributed. 28 Those that do receive

distribution can often languish with tiny ratings. As of August, 2007, numerous

approved category two digital channels report less than one thousand subscribers

nationally, with several below three hundred (CRTC, 2008, p. 144). By the end of

2007, the CRTC had approved 351 digital category two specialty services, only 81

had actually been launched (CRTC, 2008, p. 117).

The effectiveness of the category one/two approach is debatable: Salter & Odartey-

Wellington describe this licensing style as “an ingenious solution to adding ever more

digital specialty services” (p. 468); whereas in an interview with Astral Media CEO

28 For example, the Arabic news channel Al-Jazeera has been an approved category two digital channel since 2004, but still has no carriage agreement with any Canadian BDU in 2009.

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and former CRTC chair André Bureau, he emphatically stated “Category two will never go anywhere” (A. Bureau, personal interview, August 18, 2008). Bureau believes the lack of genre protection for category two means too many channels in too small a market – for broadcasters it is not worth the start up costs.

In essence the 2000 licensing framework policy continued the industry-first approach recommended by the 1995 Digital Task Force:

the Commission has adopted an approach that provides a bridge between the

traditional regulatory mechanisms – which have been highly supportive of

emerging new Canadian services – and a more open-entry environment that

allows for greater risk-taking, provides for a greater number of services in the

marketplace, and allows the success of services to be increasingly determined

by customers. (CRTC 2000-6)

Specialty channels were not the only new products of the emerging digital era. The new technology also allowed for Video on Demand and Pay per View services on many BDUs. Like the CRTC has done with other emerging technologies such as mobile television and even the internet, the regulations placed upon these new players in the system were decidedly light. By condition of licence, a minimum of 5% of

English-language feature films, 8% of French-language feature films, and 20% of other programming made available by VOD and PPV undertakings were required to

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be Canadian. VOD and PPV undertakings are also required to contribute 5% of gross revenues to a Canadian program production fund (CRTC 2000-172).

The year 2000 was pivotal for pay and specialty channels in the digital transition. The

CRTC set some guidelines for new entries into the system but also exercised its option not to offer policy guidelines for incumbents. True to its market-centred policy, the CRTC allowed industry to largely chart its own course through the pay and specialty digital switchover. In Establishment of an industry working group to examine the digital distribution of existing pay and specialty services, (Public Notice

CRTC 2000-113) the Commission asked industry to develop proposals to govern the migration of existing pay and specialty services from analog to digital distribution.

Like the early Task Force, the working group was totally dominated by industry with only one public representative. The Digital Migration Working Group included members of the Canadian Cable Television Association (CCTA), the Canadian Cable

Systems Alliance (CCSA – a group representing small cable companies), the

Canadian Association of Broadcasters (CAB), the Specialty and Premium Television

Association (SPTV, now amalgamated with the CAB). A single representative of the

Public Interest Advocacy Centre (PIAC) was included to, in the CRTC’s words,

“ensure that the views of consumers were taken into account” (CRTC 2001-58).

However, according to the Report appendix, Andrew Reddick of the PIAC only attended one of the eight working group meetings in the fall of 2000 (CRTC 2001, p.

62). Thus, digital migration for pay and specialty channels in Canada was largely an industry-only project.

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In establishing the group, the Commission advised that it foresaw two possible migration scenarios:

"complete migration" of the service from analog to digital cable would occur

where the service is no longer available as an analog cable service; and

"partial migration" of the service from analog to digital cable would occur

where the service remains available as an analog cable service and is also

available as a digital cable service on a stand-alone and/or package basis.

(CRTC 2000-113)

The CRTC recognized that “negotiations between pay and specialty programmers and distributors concerning the renewal of existing affiliation agreements have been proceeding with difficulty” (CRTC 2000-113). There was little industrial incentive to overcome these differences and despite deadline extensions granted to the group, they could still not reach consensus (CRTC 2000-113-1). Though they managed a report

(The Distribution of Existing Analog Pay and Specialty Services on a Digital Basis), difficulties continued and the group was largely seen as a failure.

Specialty and pay channels exist via a symbiotic relationship with BDUs – they need each other to exist. There were substantial differences over whether or not BDUs required permission from channels to transmit digital broadcasts of previously analogue programs. Also, within BDUs themselves, the split between large and small cable and programmers proved too much for the group to bridge. Distributors and programmers were unable to come to a consensus with respect to larger cable BDUs,

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and therefore set out their respective positions separately in the report. There was general consensus that complete migration would be confusing to the public and damaging to industry, especially for larger cable companies who have capacity to carry both analogue and digital for a period. It was also observed that this might prove more of a challenge for small cable providers who would likely require a separate policy (CRTC 2001, p. 19).

Despite the obvious difficulties with the approach, the CRTC called upon the Digital

Migration Group yet again in 2001 to “to consider the resolution of outstanding migration issues as they pertain to the larger cable systems” (CRTC 2001-58). The reconvening of the working group did not result in any further consensus, and the working group was adjourned indefinitely in March 2003 (CRTC 2006).

The regulator eventually brought forth policy for previously licenced broadcasters in the Call for comments on a proposed framework for the licensing and distribution of high definition pay and specialty services (CRTC 2004-58). The CRTC proposes a different set of regulations to protect incumbent broadcasters in the pay and specialty area. The emphasis upon established broadcasters is to promote the transition to not just digital, but to high definition broadcasting. These channels would have to apply for new transitional licenses but under most of the same parameters established under the analogue regime. The Commission granted existing pay and specialty licensees an unspecified “reasonable period of time” to prepare new business plans and, in particular, to apply for new HD-transitional licences (CRTC 2004-58). The CRTC’s

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policy was to see HD technology as a replacement for the analog and standard

definition digital technologies.

Albeit in vague terms, the CRTC tried to spur on the digital switchover of established

specialty broadcasters by leaving the door slightly ajar for new players as the

protected analogue world migrates to digital. Previous pay and specialty licensees

would continue to enjoy existing genre protection during this transitional period and

would generally qualify for this new class of licence when offering upgraded versions

of their services containing HD programming, regardless of the amount; however, the

Commission would consider an application by a prospective new entrant for a licence to carry on an HD-transitional service in the programming genre “should the licensee fail to apply for an HD-transitional licence within a reasonable period, or otherwise

fail to demonstrate that it is prepared to submit an application on a timely basis”

(CRTC 2004-58).

With some upgrades, incumbent channels would be well-served under the emerging

digital platform. Pay and specialty channels who provide some upgrading to HD

receive the required carriage status they had previously known with BDUs, but those

who failed to make the minimal transition would have to negotiate their own carriage

agreements with BDUs, much the same as a category two licence.

Industry lobbied for, and received, the use of transitional licences instead of a sharp

cut-off for analogue. These licences, which last for up to three years, allow for

broadcasters to maintain analogue signals while developing their digital base. Still,

there was uncertainty on how to proceed and two deadline extensions were granted

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(CRTC 2004-58-1; CRTC 2004-58-2) as industry prepared their comments on issues

of pay and specialty channels.

3.3 High Definition Television (HD)29

It is clear from the pay and specialty channel policies that the CRTC views high

definition as a central pillar of the future Canadian television environment. The

CRTC had high ambitions for the place of HD early in the digital policy process. In

2002, CRTC policy stated: “the Commission encourages transitional DTV

broadcasters to ensure that, by 31 December 2007, two thirds of each broadcaster's

schedule is available in the HD format” (CRTC 2002-31). While progress has been

made on HD programming, it does not approach the 2002 expectation. Nevertheless,

the CRTC remains committed to pursuing a strong HD system:

The transition will be complete when all viewers in Canada can receive high

definition programming… low definition services would be phased out and all

services would be produced and distributed in high definition.

(CRTC 2004-58)

There is little by way of public interest objectives in HD. While the picture quality is

superb and the sound is suitable for home theatres, this element in the digital

transition is a simple matter of consumer demand and industrial opportunity.30

29 Also sometimes called HDTV, the CRTC has made HD the standard acronym so as to prevent any confusion with a proposed channel called HDTV.

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The CRTC has spent a great deal of policy effort in expanding the high definition

(HD) format because it believes HD places Canada in a stronger international position in the media marketplace. This stands in contrast to many European systems which

have placed little emphasis upon HD and much more upon free over-the-air digital channels (CRTC 2006, p. 220). While paying scant regard to public interest concerns

as expressed in the American debate, the CRTC followed the American lead in

emphasizing the value of HD and brought forth policy to encourage HD as the new

standard. High definition programming is another example of the CRTC preferring

the carrot of lessening of regulatory burden to the stick of actual binding regulations;

however, policy statements and market incentives have thus far proven largely

inadequate to reach the regulator’s stated goals. In 2007, less than 30% of Canadian

homes were equipped with a high definition television – a number which did not

provide financial incentive for the private sector to reach the CRTC’s stated target of

two thirds HD programming (CRTC, 2008, p. 170).

Despite these regulatory and marketplace hurdles, the switch to high definition is

generally viewed as a worthwhile industrial initiative and is gaining popularity

worldwide in regions that initially resisted. The International Telecommunications

Union (ITU) has recognized HD as the internationally recognized standard for

program exchange (sales) and HD holds great appeal in the world’s largest media

market, the United States. A country like Canada has a spectrum advantage for HD

30 In an interview, Michael McEwen challenged this perception. When asked if he thought there were public interest elements inherent in HD he responded “Absolutely I do. As a shooter (cameraperson) there is no better story telling tool”.

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as the spectrum space is more abundant than higher population concentrations of the

U.S. or Europe, and therefore able to accommodate the higher spectrum demands of

HD transmission.31

The higher spectrum demands of Europe have made HD a less attractive proposition

for that region, yet there as well HD production is seen as increasingly necessary.

France has little emphasis upon HD for its digital switchover policy, yet has made a

significant commitment to D-Cinema programming, which is defined as high

definition, to ensure the international market remains fully accessible to French

audio-visual products. The same is largely true in the UK, which has almost no OTA

HD despite a strong digital penetration, yet produces a great deal of HD programming

for international export (McEwen, 2006).

From the very beginning of the digital transition, the United States has seen HD as the

prime consumer benefit of over the air digital transmission. HD has been cited by the

U.S. government, the FCC and the industry as the “gold standard” for over the air

digital service (McEwen, 2006, p. 39). For Canadian programs to have a chance to

gain access to, and be competitive in, the lucrative American market, programming

will have to be produced in high definition. This economic fact is a far more plausible factor in the recent jump in Canadian HD production than the relatively weak regulatory position of the CRTC.

31 An exception to this rule is the more limited transmission capacity of DTH satellite.

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To encourage high definition in digital television the CRTC has made licensing easier

for those broadcasters who reach a certain percentage of HD programming, as set out

in the frameworks established in Public Notices 2002-31 and 2003-61. In order to receive guaranteed distribution rights under transitional DTV licenses, incumbent

broadcasters are allowed to broadcast a maximum of 14 hours per week of high

definition programming that is not duplicated on the analog version of the service. A

minimum of 50% of this unduplicated high-definition programming must be

Canadian and all of the unduplicated programming must be in high definition (CRTC,

2008).32 This provides opportunity for cross-promoting HD on the analogue service

and awards the licensee a second channel during the transitional period. The

Commission’s policy also states that HD-transitional licence holders should not

receive mandatory carriage by BDUs unless they provide certain minimum levels of

high definition programming. Services that do not meet these minimum levels will

retain their license, but carriage arrangements would be established through

negotiations with BDUs, similar to category two digital channels (CRTC 2004-58).

Furthermore, genre protection would not be guaranteed if an existing licensee fails to

apply for an HD-transitional licence within “a reasonable period of time” (CRTC

2004-58).

32 If the proposed HD-transitional service is a French-language service, at least 30% of the programming must be in HD format, of which at least 50% must have been originally produced in French.

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The high definition policy has encountered strong criticism. In a 2005 letter to the regulator, the CBC/Radio Canada expressed concern with the feasibility of the high definition benchmarks. Bev Kirshenblatt, CBC/Radio Canada’s Senior Director of

Regulatory Affairs, supported the move to digital broadcasting but took exception to the policy that HD should be the standard:

…in the narrower context of high definition, HD should not be considered as

a replacement to SD (standard definition) pay and specialty services. It should

be regarded as an adjunct. … these proposed thresholds will be unachievable

for Newsworld and RDI for the foreseeable future. (CBC, 2005)

Also in 2005, the Directors Guild of Canada noted the Commission has not yet completed the regulatory framework for the broadcast and distribution of new HD content (Directors Guild of Canada, 2005). The CRTC addressed these concerns, albeit vaguely, in Broadcasting Public Notice 2006-74 Establishing the regulatory framework relating to the licensing and carriage of high definition pay and specialty services. Under the Commission's proposed framework, the distribution rights of any new HD pay and specialty service would be determined at the time the service was licensed, and would range from required distribution to a situation where distribution would be left totally to negotiations between the programmer and distributors.

The CRTC continues to maintain hope that these incentives will be adequate, maintaining faith in market forces to complete the transition. There is reason for doubt, but progress in this area is being made. According to the 2006/2007 Canadian

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Television Fund (CTF) annual report, Canadian HD production increased from 7% in

2003/2004 to 30% in 2006/2007. English-language HD production represented 44%

of all English-language production in 2006/2007. (CRTC 2008-100).

3.4 Broadcasting Distribution Undertakings (BDUs)

Cable, DTH satellite, and multipoint distribution systems (MDS – common in multi-

dwelling buildings) have become essential, highly profitable elements of Canadian

broadcasting.33 Regulation in this sector is one of the most complex and contested

areas of CRTC jurisdiction - BDUs hold the keys to success for Canadian content

producers and broadcasters and despite a general trend of deregulation in the field,

there remains little actual competition. The BDU industry in Canada is run by a

handful of large, financially robust companies. In 2007, four large cable companies

and two DTH services captured approximately 90% of the BDU subscribers in

Canada, with the remaining 10% split among many small cable companies (CRTC,

2008).

The CRTC has taken a decidedly deregulatory position with BDUs, which has fuelled

the years of growth in the sector. Since 2001, BDUs have been permitted to own

programming services, leading to potential conflicts with competing programming

33 Internet Protocol Television (IPTV) is a new BDU which refers to the delivery of programming services utilising Internet Protocol (IP) technology. Like DTH satellite and MDS, IPTV is a strictly digital distribution system.

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services. In 2000, the CRTC changed its traditional position and allowed for BDUs to own category two digital channels and followed this in 2001 by permitting BDUs to own discretionary analogue channels (Public Notice CRTC 2001-66-1, Ownership of analog discretionary services by cable undertakings – amendment to the

Commission’s policy).

The growth of this sector has meant profound changes for the greater system: traditional OTA broadcasting no longer enjoys the dominance it once had; the system is now much more reliant upon subscription revenue than advertising; there has been an enormous expansion in the number of channels offered; broadcasters are much less inclined to invest in transmission equipment for OTA signals; and local broadcasting has become much less profitable.

Unlike HD, which has largely industrial and aesthetic appeal, there is a strong correlation between BDUs and the public interest element within the Canadian broadcasting system. The widespread adoption of BDU services by the Canadian public has placed these distribution companies in the role of television gatekeepers for many citizens. The success of BDUs has made them a necessary part of the system, subject to legislative authority beyond the regulator. The 1991 Broadcasting

Act mandates in section 3,1 t (t) that distribution undertakings

should give priority to the carriage of Canadian programming services and, in

particular, to the carriage of local Canadian stations,

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should provide efficient delivery of programming at affordable rates, using the

most effective technologies available at reasonable cost,

should, where programming services are supplied to them by broadcasting

undertakings pursuant to contractual arrangements, provide reasonable terms

for the carriage, packaging and retailing of those programming services, and

may, where the Commission considers it appropriate, originate programming,

including local programming, on such terms as are conducive to the

achievement of the objectives of the broadcasting policy set out in this

subsection, and in particular provide access for underserved linguistic and

cultural minority communities.

Approximately 85% of Canadians receive their television signal via a BDU.34 In

2007, BDU broadcasting revenues increased 1.4 and 2.0 times faster than radio and

television respectively: BDU broadcasting revenues increased 8.8% from $5.8 billion

in 2006 to $6.3 billion in 2007; whereas private commercial radio revenues increased

6.2% from $1.4 billion to $1.5 billion and television revenues increased 4.3% from

$5.0 billion to $5.3 billion (CRTC, 2008, p. 80). For purposes of the digital

transition, the major emphasis is upon the cable operators, as DTH satellite

transmissions have always been a digital service, though DTH too poses some regulatory challenges regarding HD and transmission capacity.

In 1998, the CRTC revised the Broadcasting Distribution Regulations largely to introduce direct-to-home satellite into the Canadian broadcasting system. Those rules

34 The number has been estimated as high as 90%.

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have proven inadequate for the greater power of BDUs in the digital era. The industry is centr al to the CRTC’s overall digital broadcasting transition plan for the vast majorit y of Canadians. According to the Digital Migration Framework, the CRTC has stru ctured the transition to take place over the following three stages, of which, cable BDUs in 2008 are in the first stage and DTH satellite are in the second:

1. The distribution of analog as well as digital services.

2. No analog services will be distributed. Instead, BDUs will offer a mix of

predominantly low definition digital services with some HD services.

3. HD digital services will predominate. (CRTC 2006-23)

Since the launch of the digital transition plan, the position of cable companies has been a sticking point, yet BDUs remain an essential component of the process. Early in the digital transmission process, the CRTC admitted that there would be little initial policy surrounding the position of BDUs. In June of 2001 Call for comments on a proposed policy to oversee the transition from analog to digital over-the-air television broadcasting, the CRTC states,

The Commission has not proposed any specific policy principles with respect

to the carriage of off-air DTV signals by broadcasting distribution

undertakings (BDUs). Rather, it asks a number of questions concerning what

principles, when applied to the distribution of such signals, would best serve

the objectives of the Broadcasting Act. (CRTC 2001-62)

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In the ensuing years, the role of BDUs in the digital television era has been a source

of contention for many players in the broadcasting system. The Digital Migration

Working Group – in itself a product of the lack of policy direction - was a clear example of the rift between the larger BDUs and the rest of the system. There are strong divisions between distributors/programmers and BDUs over questions of access and packaging of digital channels. Distributors and programmers are concerned that in the period between periods two and three of the transition, flexibility in packaging (a position supported by cable BDUs) would result in fewer subscribers to individual services. Without the support offered by the traditional

packaging system, programmers fear consequent reductions in both subscriber and

advertising revenues, at the very time they need to increase their expenditures to

finance the transition to high definition digital broadcasting. The Digital Migration

Working Group was a failure largely in part because distributors and programmers

were unable to come to a consensus with respect to the role of larger cable BDUs.35

Another prominent division was the different standards between large and small

BDUs. Smaller system cable providers (represented by the CCSA) have some particular problems in accommodating the financial burden of the investments required for digital television. Despite words of encouragement from others in the

Digital Migration Working Group, they had trouble gaining consensus on many key

35 The CRTC claims its stated policy on the digital transition was “greatly assisted” by the recommendations of the 1997 Task Force (CRTC 2001-62). Michael McEwen, the former Chair of the Task Force, later disputes this claim in his 2006 study A Report to the CRTC on Digital Transition Strategies in a Number of Different Countries. He writes of the reaction to the 1997 report: “No action was taken on the plan except for spectrum related issues for over the air broadcasters” (McEwen, 2006).

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issues from either the CCTA or program providers. Among other requests, the CCSA

sought to access non-Canadian signals from U.S. satellites (known as HITS – high end in the sky); guaranteed access to digital specialty and pay services whether or not they carry them on analogue; and duplication of analogue programming to digital without seeking permission from programmers. In the end, the only real agreement was that there should be separate rules guiding digital distribution on smaller systems, though no agreement as to the substance of those rules (CRTC 2001, p. 46).

In 2001, the CRTC set policy designed to help smaller BDUs, companies that are not part of the larger corporations and often serve a client base of 20,000 or less.36 In the

Small cable systems - Digital migration policy (CRTC 2001-130), the CRTC stated

that small cable providers are to receive permission for the digital transfer “where the

cable system undertakes that the programmer will be substantially no worse off, in

terms of wholesale fees received” (CRTC 2001-130). In this strange policy approach,

consent is still required but the CRTC is stating they expect the request to be merely a

formality. While the retooling required by the digital transition presents a

proportionately greater financial hurdle for these companies, the increased carrying

capacity gives them the opportunity to offer greater choice to their customers. The

same 2001 policy announcement recognizes this fact and also instructs programmers

to give consent “for digital distribution of services that would normally have been

entitled to analog distribution, but which have not been carried by a small system due

to lack of capacity” (CRTC 2001-130).

36 2001-130 the CRTC defined a "small cable system" as one that is not owned or operated, directly or indirectly, by Rogers, Shaw, Vidéotron or Cogeco, without regard to the number of subscribers.

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Thus, the regulations for BDUs, large and small, is a particularly complex and ever- evolving process – a reflection of its increasing centrality to the overall broadcasting system and the evolution of the distribution technology. Two regulatory approaches based in the analogue era and unique to BDUs are known as preponderance and tiering. Preponderance essentially assures that the services offered by BDUs will have a majority of Canadian channels, while tiers refer to the carriage requirements imposed on BDUs as a condition of license. For example, the first tier channels must include the programming services of the Canadian Broadcasting Corporation (CBC) in French and English, the provincial education television stations, all local television stations, and regional/extra-regional television stations where a local station is not available. In addition, pursuant to section 9,1,h of the Broadcasting Act, the CRTC requires the distribution of the Aboriginal Peoples Television Network (APTN).

There is also a discretionary tier where the BDU has the power to determine carriage requirements and packaging, but the approved channels must be offered to subscribers. After 2001, the CRTC established a new tier above the discretionary level in the uncertain, truly free market of category two digital channels. The purpose of tiers has been to ensure Canadian channels are not just included in BDU services but given preferred access. Most BDUs have argued against maintaining tiers in the digital era to allow them greater flexibility in what they offer consumers.

A tiered system becomes far more difficult to enforce or maintain when choice becomes more abundant and viewers are selecting individual programs in a digital

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environment. Also the CRTC has recognized that “must carry” obligations on BDUs

become much more challenging in a digital system and the regulator has expressed policy interest in removing all such obligations and instead relying on a simpler preponderance rule, assuring Canadian channels are the majority:

It is the Commission's view that program packaging should be a matter left

more to negotiations between programmers and distributors. Accordingly, the

Commission proposes to eliminate most of the distribution and linkage rules,

in respect of both analog/SD and HD services, and both analog and digital

distribution. (CRTC 2007-10)

This poses distinct challenges in the province of Quebec where Astral Broadcasting notes in its 2006 submission to the CRTC that the risks of the digital transition are even more pronounced for French-language services. Specifically, Astral points out the significantly smaller size of the French-language market, the fact that one BDU

(Quebecor) controls a large proportion of the services' subscriber revenue, and the further fact that the number of French-language services is too small to permit the creation of large and attractive digital packages. Accordingly, Astral recommended the maintenance of the existing analog tiers in a digital environment, along with packaging that replicates the high penetration of the analog distribution environment

(CRTC 2006-23).

BDUs, with the notable exception of Rogers, generally opposed this view and recommended a market-driven approach with minimal regulatory intervention,

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including few, if any, packaging or linkage rules, and no requirement for obtaining programmer consent prior to distributing analog services on a digital basis.

Programmers generally recommended that cable operators be required to obtain

consent prior to duplicating or migrating analog services. Distributors other than

Rogers argued that consent should not be required, and submitted that the requirement of consent from programmers stalls the digital transition.

The powerful Rogers company had a different proposal. A strange alliance surfaced

prior to the Digital Migration Framework released by the CRTC in 2006. Seven

programmers: Astral, Alliance Atlantis, CHUM Limited, Corus Entertainment, CTV,

Global Television Network, and Rogers Broadcasting, submitted with their comments

a copy of a Memorandum of Understanding (MOU) that they, as operators of a number of specialty services, had entered into with Rogers. Under the terms of the

MOU, it would be unreasonable for a programmer to withhold consent (and consent

would thus be granted) where the cable BDU offers the programmer assurances that there will not be a significant decline in overall number of subscribers or penetration of an analog service as a result of its introduction into digital packages (CRTC 2006-

23). Other BDU operators argued that the MOU represented a negotiated solution suited to the particular business requirements and competitive strategies of Rogers.

3.5 Over-the-Air Broadcasting

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I would like to make the CRTC’s position very clear. Over-the-air transmission has always been the cornerstone of our broadcasting system. We expect that OTA will move to digital and will continue to play that key role. It is here to stay…

- Konrad von Finckenstein, June 19, 2008, speech to the 2008 Broadcasting Invitational Summit, Cambridge, ON

Over-the-Air (OTA) broadcasting remains the most difficult policy project of the digital television transition. The CRTC finds itself caught in a bind of its own making: it remains steadfastly committed to both a market-based approach, while placing primary importance on an area of broadcasting (OTA) which is increasingly rejecting the traditional market paradigm. This has resulted in a great deal of uncertainty surrounding what has traditionally been the heart of the Canadian broadcasting system. In the hearings before the Standing Committee on Canadian

Heritage which preceded Our Cultural Sovereignty, the Canadian Association of

Broadcasters stated that OTA broadcasters “make the greatest policy contribution…they make the greatest contribution to Canadian viewing” (Canada,

2003, p. 436). This observation has been true for over 50 years of Canadian television, but is increasingly less so in the digital era. Pay and specialty channels have thrived in the last ten years and their future looks even more promising in the digital environment as they do not have to bear the substantial costs faced by OTA broadcasters of constructing transmitters to provide their upgraded services.

Unlike the more industrial-focused concerns of the switch to high definition, or the multiple consumer options provided by BDUs and pay/ specialty channels, what is at stake in the OTA sector of the Canadian broadcasting system is the central question

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of universality. Freely accessible, advertising-supported television ensures that no

Canadian is excluded from the system. The initial 1997 Report of the Task Force on

the Implementation of Digital Television states, “Over-the-air broadcasters are at the

heart of the successful transition to digital television” (Canada, 1997, p. 14).

The essential controversy surrounding the Canadian broadcasting system’s digital change revolves around the rights of the 10 - 15% of the population to receive OTA television signals. In the digital transition, there is no government support to assist this group to purchase decoders, as there is in the United States, nor do they form a tempting market to merit the necessary investment from private broadcasters. In

2008, out of the hundreds of OTA television transmitters in Canada, 20 are capable of transmitting digital signals (McEwen, 2009, p. 10; Salter & Odartey-Wellington, p.

584; CRTC, 2008, p. 35).

The CRTC stepped into the digital OTA debate in 2001 when it announced a call for

comments on a proposed policy to oversee the transition from analog to digital over-

the-air television broadcasting (CRTC 2001-62). The most significant statement in

the CRTC 2001 call for comments was the following:

The Commission also considers that a voluntary transition model, i.e. one that

would develop at a pace set by the marketplace rather than mandated, is the

most appropriate approach for the Canadian broadcasting system.

(CRTC 2001-62)

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With this one sentence, the CRTC set the Canadian broadcasting system on a very different policy course than most industrialized nations, most of whom have set benchmarks, and set the stage for many of the problems Canada now faces with the digital switchover. This policy announcement was strongly supported by the main private sector actors, the Canadian Association of Broadcasters (CAB) and Canadian cable and satellite providers. The 2001 announcement recognized the difficulty of the digital transition for OTA broadcasters and offered what it believed were incentives to ease and encourage the transition:

1) Applications by existing licensees would be processed expeditiously by the

Commission.

2) The CRTC would allow broadcasters to offer a certain amount of

programming on their digital operations that differs from their traditional analog programming.

3) The Commission would generally expect broadcasters to provide digital

coverage that matches their current analog coverage (within the constraints of

Industry Canada's allotment plan), and to maintain their existing analog

coverage in full during the transition period.

4) In smaller and rural markets, a direct switchover to digital transmission

may be the only affordable course of action. However, this will take place

after the urban areas. (CRTC 2001-62)

Despite these policy carrots to industry, the CRTC recognized it still had work to do.

In 2001, the CRTC also recognized its many lengthy policy shortcomings including:

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· service to secondary markets and rural areas;

· the transition to digital of Canada's program production industry, to the

extent that the Commission has a role to play in the issue;

· programming obligations in the digital age;

· the completion of broadcasting's transitional phase; and

· the termination strategy for analog over-the-air transmissions.

(CRTC 2001-62)

As is often the case with policy announcements, the 2001 call for comments preceded

a 2002 public notice which allowed for more policy structure: A licensing policy to oversee the transition from analog to digital over-the-air television broadcasting

(CRTC 2002-31). The position on the market model was reiterated in the licensing

policy statement: “A voluntary, market-driven transition model, without mandated

deadlines, is the most appropriate approach for Canada” (CRTC 2002-31). In most

countries in the Western world the switch-off date was mandated by government - industry either followed suit or faced going off the air. The UK had a series of clearly scheduled geographical benchmarks for digital television. In the United States, the government auctioned much of the analogue spectrum space so broadcasters had no choice but to make the transition, which they by and large have done.

With the CRTC policy announcements of 2001-2002, Canada assumed its own

regulation-free path to begin the era of digital television. Despite the regulator’s

policy statement, “The Commission reiterates the importance it places on the

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preservation of free, universal access to broadcast services” (CRTC 2002-31), it is

precisely this service which is primarily challenged by the digital transition. In the

2003 Regulatory framework for the distribution of digital television signals (CRTC

2003-61), the CRTC offered support to OTA broadcasters by insisting they receive priority carriage on all future digital BDU packages. However, the OTA broadcasters claimed this was not enough and their financial futures depended upon receiving payment for their signals by BDUs.37

Given the substantial transition start-up costs for OTA broadcasters, coupled with

their continually diminishing returns over the last decade, the argument that all

channels should be transmitted strictly via BDU makes economic sense. However,

the CRTC notes that relying solely on BDUs for the distribution of digital/HD

programming may be cost effective for broadcasters, but the Commission considers

that there are a number of consumer benefits in maintaining OTA transmission

facilities. These benefits are as follows:

There is no cost to viewers, so accessibility is provided to low income

households and households with low levels of television viewing.

It can offer Canadian alternatives to viewers who continue to rely on OTA

television reception and will have access to U.S. OTA border stations.

The quality of digital signals delivered by OTA transmitters is excellent.

(CRTC 2007-53)

37 This request was rejected by the CRTC in Broadcasting Public Notice 2007-53.

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Despite the increasing difficulty making OTA profitable, it has been noted both in

Canada and the United States that no licence-holding OTA broadcaster has thus far

been willing to forfeit its licence (Canada, 2003; McEwen, 2006). Broadcasters have

been explicit that they did not want to vacate their analogue positions too soon in the

digital transition, citing the value of cross promotion for digital services. Canadian

broadcasters who are willing to give up OTA transmissions would also risk losing

privileges like priority carriage on BDUs and simultaneous advertising substitution –

a sacrifice that none thus far are willing to make.

In 2006, almost ten years after the first reports on digital television for Canada, the

CRTC realized it had a policy problem and held hearings to reassess the situation.

Many of the problems still faced at this late date, clearly demonstrate the ineffectiveness of the market-driven policy. For example, as late as 2006 the regulator found it necessary to “examine options for the most effective means of delivering

Canadian digital/high definition (HD) television to Canadians” (CRTC 2006-5).

In essence, the 2006 review of certain aspects of the regulatory framework for over-

the-air television was an admission of failure on the part of the CRTC’s policy

structure for digital television, in particular as it relates to OTA broadcasts. The obvious weaknesses of the approach demonstrate the limits of light-touch regulation –

the resulting uncertainties helped no one, except perhaps businesses who were

unwilling to make the investments that had initially been agreed upon as the required

“costs of doing business” (CRTC 2006-74).

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Conclusion

The early policy structure for the digital television transition in Canada is certainly

sketchy, but some essential components have emerged intact: the entire analogue

system will be replaced with digital; the desired mode of production and delivery is

high definition; the established broadcasters will be given transitional licences where

they will be allowed to broadcast both in analogue and digital for a set period;

broadcasters who do not make an effort to upgrade their programming to HD may

forfeit their licence; OTA broadcasters retain simultaneous substitution rights and must-carry status on BDUs; the CRTC will forego establishing clear deadlines in favour of a market-led schedule.

Policy statements are supposed to give structure to future regulatory developments.

In the case of digital television, the CRTC’s decision to forgo policy structure in

favour of market mechanisms reveals much of the inherent necessity of policy oversight. The often contradictory positions of the various economic interests resulted in an uncertain climate and placed the CRTC in a position where it once

again has to regulate or risk the Canadian system being left further behind in the

digital transition. The more recent developments of the digital transition found the

regulator taking more of a prominent role.

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From the perspective of citizenship in the sense of democratic accountability and

Habermasian notions of an active and engaged public sphere, the American

experience in the digital television transition has been far more successful than its

Canadian counterpart. While the effectiveness of the U.S. public debate is yet to be fully determined, it is clear that the idea that digital television has the potential to enhance civic engagement is receiving consideration at the highest levels of government and has given rise to an active movement within civil society. Neither of these can be said of the Canadian experience.

The next chapter will examine the regulatory decisions of the CRTC vis-à-vis the digital television transition.

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Chapter Four: Regulations – the Digital Television Transition

The early years of the Canadian digital television transition were light on policy and

timelines, with binding regulations almost entirely absent from the procedure. This formative period saw a very basic policy structure essentially in place, but with many details still to be determined as the U.S. analogue shut off of February, 2009

approached. The industrial benefits (less expensive hardware, learning from

American errors) of planning a two year grace period between American and

Canadian ASO also present certain obstacles. The CRTC and industry realize that the

American transition will place much greater pressure on the Canadian system. A

longstanding challenge for maintaining Canadian viewers within the Canadian

broadcasting system is the fact that the vast majority of Canadians reside along the

American border and receive American broadcasts. The American switchover will

mean much more HD telecasts for those with the technical ability to continue to

receive American channels (a digital receiver), and a loss of American signals for

Canadians relying upon OTA analogue – a privilege many Canadian border towns

have long enjoyed.

Perhaps more importantly, after the 2009 American ASO, the digital transition will no

longer be happening largely below the public radar. Given the interrelations between

Canadian and American television, it is safe to say the exposure generated by the

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American ASO will result in more questions on the progress of the Canadian system

– questions the CRTC may have trouble answering.

The early policy approach of deferring to industrial groups did not generate a clear policy direction and, with the exception of technical achievements done in tandem with Industry Canada, the working groups accomplished little, save perhaps to demonstrate the necessity of a public regulator for the Canadian broadcasting system.

Squabbles between various sectors of the industry proved difficult to overcome.

There has been increased high-level criticism of the overall Canadian policy tactics as the digital television transition has progressed. In 2003, the Standing Committee on

Canadian Heritage released its extensive report Our Cultural Sovereignty (the Lincoln

Report), in which the Committee determined a great deal of work was yet to be done on the digital transition. Much of the blame was focused upon the relatively weak government and public involvement in the process at that point.

RECOMMENDATION 12.1:

The Committee recommends that the responsible federal departments and

agencies develop a comprehensive plan for the digital transition in

conjunction with the broadcasting industry and related public, private and not-

for-profit stakeholders. (Canada, 2003, p. 442)

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The Lincoln Report was one of the first high profile challenges, but more were forthcoming. The CRTC issued a call for comments on its proposed regulatory framework for licensing and distribution of HD pay and specialty services in 2004

(CRTC 2004-58). In the hearings which followed in 2005 the CRTC faced criticism

for its industry working group approach:

Parties to the present proceeding suggested that a working group was not the

most appropriate way to deal with the important policy issues that surround

the migration of analog services to digital distribution, and argued that such

matters would best be dealt with by the Commission. (CRTC 2005-1)

In 2006, the CRTC received a report from Michael McEwen, the former chair of the

Digital Migration Working Group and the Task Force on the Implementation of

Digital Television, entitled A Report to the CRTC on Digital Transition Strategies in a Number of Different Countries. McEwen was scathing in his assessment of

Canadian efforts in the first years of the digital transition. He notes, “Regrettably

Canada has fallen further and further behind the US and the two-year lag has turned into at least 4 years and maybe more” (McEwen, 2006). McEwen lays the blame for this inertia on government and industry, while claiming the CRTC has made the best of a difficult situation. He writes, “…there has been no concrete policy, legislative, economic or social initiatives to move the conventional broadcast industry to digital over the air services” (McEwen, 2006).

In an interview for this dissertation Michael McEwen went further in his critique:

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Where the responsibility I think lies is not even with the CRTC – the CRTC

has a responsibility to regulate from the framework that they’re given. The

reality is government have not provided a policy framework. Absolutely

none. So if there is a failure here, it is a failure to challenge industry

assumptions and that shouldn’t be up to the CRTC.

(M. McEwen, personal interview, April 23, 2009)

McEwen’s concerns were echoed by actors within the broadcasting industry. As the

decade progressed and the U.S. deadline loomed larger, the production industry

became increasingly concerned with the haphazard policy structure. In a 2005 letter

to the CRTC, the Directors Guild of Canada expressed frustration that

…the regulatory framework for the broadcast and distribution of HD

programming services is not yet established for key components of our

broadcasting system (Directors Guild, 2005).

Despite reaching out to industry via early working groups, obviously much of the

market it was designed to serve was not pleased with the results of this policy

outsourcing. The approach of deferring to industry for the digital television transition

policy has not been employed since by the CRTC. The latter stages of this transition

will require measurable progress if Canada is to have any chance of meeting its goal

of following the 2009 American ASO by two years.

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The spectre of United States television broadcasting going digital also sounded alarm bells within Industry Canada, which is responsible for spectrum allocation in Canada.

In a 2006 letter to the CRTC, Assistant Deputy Minister Michael Binder encouraged the CRTC to establish a clear Canadian ASO:

Given the potential for alternative use of spectrum to be freed-up by the

transition to DTV, Industry Canada is of the view, from the perspective of

efficient and effective management of the radio spectrum, that serious

consideration should be given to specifying a date for the shut down of OTA

analogue television. Such a date could be closely aligned within a North

American market with a view to ensuring that Canadians will be able to

receive Canadian OTA DTV within a North American market time frame.

This could also contribute to Canadian broadcasters maintaining their

viewership, particularly in markets along the Canada/US border where

American television stations are rapidly moving to DTV.

(Industry Canada, 2006a)

In 2006, the CRTC itself began to publicly acknowledge great trepidation about the

continued viability of the market-led Canadian digital television transition plan.

Despite calls from various sources that elected officials take a more active role in the

process, it became increasingly apparent that the CRTC would have to set a more

detailed and enforced program if the transition was to progress. This view was clearly

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expressed by the regulator in the Regulatory framework for the licensing and

distribution of high definition pay and specialty services:

In the Commission's view, if the gap (between Canada and the United States)

continues to widen, it will take its toll on the Canadian broadcasting system,

and audiences for all Canadian services will be affected. Given the

consequences for the Canadian broadcasting system, the Commission expects

the broadcast industry to pick up the pace of its transition.

And the framework concludes with a thinly veiled threat to industry:

The Commission considers that these incentives, together with potential

further audience losses to non-Canadian services, should stimulate the

industry to accelerate the transition to HD. As noted earlier, should this prove

not to be the case, the Commission would be prepared to consider further

measures to ensure that the objectives of the Act, as well as the Commission's

principles and objectives for the transition to digital and HD broadcasting, are

accomplished. (CRTC 2006-74)

This statement signalled a potential change in direction from the previous light touch regulatory regime, and certainly a shift in tone from the CRTC – this was the voice of a regulator reasserting itself. Such statements are largely the reason the CRTC has eventually gained respect for its efforts from critics like Michael McEwen: it is trying to fill a policy void left when the government refused to establish a clear agenda for the digital television transition. This is a stark contrast to the United States where

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Congress and the Executive Branch of the federal government was clearly involved in digital television from the beginning.

The CRTC decided early in the digital transition that the perceived rigidity of regulations was inappropriate for a technological system in flux. As demonstrated, there was a rising view that this has resulted in an uncertain broadcasting climate.

The positive outcome of the regulator’s more hands-off approach was that it had not committed to any binding action, allowing itself room to change as the transition proceeds. As Salter & Odartey-Wellington observe, the advantage of regulations is that they are formal laws, but they also have the disadvantage of relative inflexibility

(p. 156). To the CRTC’s credit, it anticipated a change in regulatory approach would be forthcoming:

As the system moves through the transition, it will be necessary to adjust the

regulatory regime. While the Commission envisages a transition that is largely

voluntary and market-driven, it will nonetheless be necessary to provide

regulatory certainty, and where required, encouragement for the

transition…(CRTC 2004-58).

Thus the CRTC seemed to admit the policy of market-led solutions was not fully successful and threatened to utilize the regulatory power it still held under the

Broadcasting Act. Another regulatory tool at the CRTC’s disposal is the conditions placed upon broadcasters via licence renewals. Unlike the broader brush of

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regulations, licences can take into consideration the particular challenges faced by various actors within the system and, as noted by the Dunbar-Leblanc report, “’fine tune’ the regulatory requirements that pertain to a particular licensee under the

Broadcasting Act” (Dunbar & Leblanc, p. 16; see also Salter & Odartey-Wellington).

In policy hearings industry often presents a more unified approach; however, licence hearings offer the arena for commercial interests to present their cases against each other, thus providing a window into the often closed world of corporate disputes within the Canadian broadcasting industry.

This chapter will examine the legally-binding regulations and licensing decisions brought forth by the CRTC and compare them against the earlier policy positions on the digital television transition. Has the rhetoric matched the eventual action taken?

There is much more at stake in a regulation decision. As Peter Foster, the Director

General of the CRTC’s Television Policy and Applications notes in an interview,

“policy outlines the CRTC’s intentions and wishes, but regulations are where the rubber hits the regulatory road” (Foster, personal interview, May 4, 2009). Again, there is an overlapping in regulations between pay and specialty, high definition,

BDUs, and OTA broadcasters – some regulatory decision can affect two or three industries, especially in the area of the increasingly ubiquitous high definition programming. The structure of regulations is not nearly as developed as the (albeit still vague) policy framework, and has only really taken shape since roughly 2005-

2006; however, regulations announcements, or “determinations”, carry much more weight, sometimes requiring a rewrite of previously established regulations.

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Although licensing decisions can be appealed to Cabinet, as demonstrated in chapter

two, the government is wary of the political optics of interfering with the decisions of

an arm’s length public regulator.

4.1 Pay and Specialty Services

In the digital transition policy established for pay and specialty channels, the CRTC

attempted to strike a fine balance of encouraging new entrants in the field, while

protecting incumbent interests. There was clearly a CRTC threat to allow new entries if the pay and specialty did not meet HD requirements; however, by 2008 no incumbent broadcasters had been forced to renegotiate their carriage requirements with BDUs. Must-carry obligations have been a traditional tool used by the CRTC to shape the system (and to somewhat lessen the power of BDUs) and reward broadcasters who meet certain criteria. The CRTC is obliged to ensure private broadcasters meet the obligations required under the 1991 Broadcasting Act. The Act is clear that private broadcasters must contribute to the greater system. In a section not included in the 1968 Act, the 1991 Act states,

(s) private networks and programming undertakings should, to an extent

consistent with the financial and other resources available to them,

(i) contribute significantly to the creation and presentation of Canadian

programming, and

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(ii) be responsive to the evolving demands of the public;

(Broadcasting Act 3(1) (s).

Genre protection (the practice of allowing no more than one channel of a certain genre per tier) and must-carry obligations for BDUs are justified by ensuring the system reflects the stated policies of the Act – such policy support is seen as

necessary for the sector’s financial survival (a point reinforced by the poor financial

performance of category two digital channels which receive no such support). Once a

pay or specialty channel licence is granted, the CRTC has been very hesitant to place

further restrictions on broadcasters and has very rarely taken the extreme measure of

removing a licence.38 No functioning television broadcaster has lost its must-carry

privileges thus far, despite concerns over the slow progress of HD services.

The pay and specialty industry in Canadian broadcasting is growing and has proven

increasingly profitable as compared to more traditional broadcasters. As of 2007

Canada had 49 Canadian analog specialty services (28 English-language, 14 French

language, 2 bilingual and 5 ethnic), who have regular annual profit margins between

25-30%; 18 category 1 digital specialty services (15 English and 3 French); 351

approved category 2 specialty services (the digital specialty sector has generally yet

to become profitable); six pay services with 25-30% annual profits; seven pay per

view services with profits between 16-22%; 18 video-on-demand licenced services,

38 The 2004 decision to not renew the licence of radio station CHOI fm in Quebec (Broadcasting Decision CRTC 2004-271) was viewed as a dramatic move by the CRTC, even though the station had repeatedly refused to comply with CRTC demands.

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whose profits have dropped from 20 to 7% between 2005 – 2007 (CRTC 2008, pp.

114-133).

Obviously, any binding regulations for the pay and specialty sector will impact a

profitable and growing sector of the broadcasting system. For companies such as

Canwest and CTV, the profits made in their subsidiaries in this sector offset some of

the losses incurred in less-lucrative OTA services. This sector also contributes to the

greater goals of the Broadcasting Act by investing heavily in Canadian programming.

In 2007, the private OTA television industry spent approximately $616, 000 on

Canadian programming, while the pay and specialty sector spent $720, 000 in English

markets alone, with another $178,000 in French broadcasting and $20, 000 in third-

language production (CRTC, 2008, pp. 146-149). There is clearly a great deal at risk

in a regulatory hearing, both for the obvious financial interests of the broadcaster, and the CRTC who by and large measures its success as a regulator by the financial health of the broadcasting sector.

This is why accusations of “command and control” regulation at the CRTC are

misleading if not entirely false: the regulatory relationship is, and always has been,

more symbiotic than that phrase would lead one to believe (Salter & Odartey-

Wellington, p. 22). The core of the relationship can be difficult to determine in

regulatory proceedings, as there is often a game afoot to conceal the truth. This is

especially true during licence hearings (see Killingsworth, 2005).

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There is a clear example of this false posturing in the development of digital pay and

specialty regulations. Pay and specialty broadcasters do not pay for transmission

equipment, as OTA broadcasters must do, and have established must-carry

agreements with BDUs. Their primary expense, and thus the subject of much

negotiation, are Canadian content obligations. It should come as little surprise that in

the licence renewal process, many of the specialty and pay channels assume the role

of the struggling entrepreneur. In the Introduction to Broadcasting Decisions CRTC

2004-6 to 2004-27 renewing the licences of 22 specialty services (Broadcasting

Public Notice CRTC 2004-2), the industry position was clear:

The most frequently expressed view among the licensees of the 1996 services

(the term used for the 22 pay and specialty services who received their

licences in 1996) themselves was that the Commission should not penalize

their entrepreneurial success by imposing requirements for Canadian program

expenditures and exhibition that are any more onerous than those that

currently apply. Many of these services, supported by their industry

association, the Canadian Association of Broadcasters (CAB), argued that any

across the board increases would be inappropriate due to the challenges the

industry now faces as a result of increased competition, audience

fragmentation, and uncertainties associated with the transition to digital

distribution. Licensees also suggested that the specialty industry has matured,

and that subscriber revenues and advertising revenues earned by specialty

services have reached a plateau.39 (CRTC 2004-2)

39 In the same hearings, this position of a revenue plateau was challenged by creative industry representatives such as the Writers Guild of Canada, the Director’s Guild of Canada and others.

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Since these hearings in 2004, this “plateau” has not proven nearly as flat as the

descriptor might indicate. According to the CRTC 2008 Communications Monitoring

Report:

Revenues reported by the pay, PPV, VOD and specialty services continue to

increase annually and since 2005 they have been the largest revenue

component of total television revenues. The revenues reported by these

services increased 9.1% or $226 million from 2006 to 2007. Since 2003, these

services have increased by an average of 9.7% per year which represents the

largest growth component of the television market. (CRTC, 2008, p. 79)

Thus, it is apparent that a large part of the regulatory procedure is trying to separate

the reality of the situation from the positions assumed by industry. In addressing the

pay and specialty sector, the CRTC is dealing with a growing, financially robust

branch of the broadcasting system, despite the alleged “challenges” faced by the

industry.

The Regulatory framework for the licensing and distribution of high definition pay

and specialty services (2006-74), demonstrates some of the give-and-take that is a

standard part of the CRTC’s regulatory procedure. In Call for comments on a proposed framework for the licensing and distribution of high definition pay and specialty services (CRTC 2004-58) which preceded the regulatory framework, the

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CRTC proposed position stated that existing specialty and pay broadcasters would obtain a must-carry HD digital licence under the following conditions:

if the proposed HD-transitional service is an English-language service, at least

50% of the programming on the proposed service must be in HD format; and

if the proposed HD-transitional service is a French-language service, at least

30% of the programming must be in HD format, of which at least 50% must

have been originally produced in French.

This policy was reiterated in the Digital Migration Framework, also in 2006, which stated, “The licensees of pay and specialty services whose upgraded versions that did not provide the specified minimum amounts of HD programming would be expected to negotiate with distributors for carriage of those upgraded versions” (2006-23). In other words, unless their transitional digital broadcast carries 50% HD (English) or

30% (French), the specialty channels may forfeit their must-carry status – a regulatory perk which can mean success or failure for a specialty broadcaster.

In the submissions following the 2004 Call for Comments, pay and specialty providers argued that any such HD thresholds should be set at much lower levels.

Specifically, speaking on behalf of pay and specialty providers, the CAB recommended that access and must-carry rights be granted for English-language services providing 25% HD content on digital channels during the evening broadcast period for the first five years, ramping up to 50% in year six. For French-language services, the CAB recommended that the levels be 15% during the evening broadcast

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period, increasing to 30% in year six (CRTC 2006-74). Despite claims of the CRTC that it remained strongly committed to an HD system, on closer reading the CAB lobbying efforts were obviously fruitful.

Perhaps sensing that the Canadian system was not going to meet the original targets, the goals were extended over the length of the seven year transitional licence. In essence, the CRTC agreed with the CAB. The regulatory framework for the licensing and distribution of high definition pay and specialty services (CRTC 2006-74) states:

Having considered the comments received, the Commission is adopting HD

thresholds for required distribution that are somewhat lower than those

proposed in Public Notice 2004-58.

With respect to English-language services, HD-transitional licences will be

issued with conditions of licence requiring the levels of HD programming set

out below:

The Commission will require that a minimum of 50% of the programming

broadcast during the evening broadcast period, i.e., 6 p.m. to midnight, be HD

programming.

In order to ensure the availability of a sufficient overall level of HD

programming to warrant required distribution, the Commission will impose a

second requirement that a minimum of 30% of the programming broadcast

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during the broadcast day be HD programming, from the beginning of the

licence term.

In order to ensure an increase in the availability of HD programming over the

medium term, the Commission will impose a requirement that a minimum of

50% of the programming broadcast during the broadcast day be in HD by the

beginning of year six of the first licence term.

While the Commission expects licensees to make maximum use of Canadian

HD programming from the commencement of their operations, the

Commission will require that, by the beginning of year six of the first licence

term, a minimum of

50% of the HD programming that a licensee must broadcast, under each of the

above requirements, be Canadian.

French Language:

30% HD content during the evening broadcast period, i.e., 6 p.m. to midnight;

20% HD content during the broadcast day, from the beginning of the licence

term;

30% HD content during the broadcast day by the beginning of year six of the

first licence term. (CRTC 2006-74)

The broadcasters did not get everything they wanted, but they succeeded in bringing about a significant discrepancy between the policy statement and the regulations for

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digital pay and specialty channels. The HD requirements would now be lowered and

phased in over six years as opposed to the initial policy where there was no allowance

for a gradual increase. In this case, the regulatory framework acquiesced to an

industry which would not have reached the initial policy targets. The story was not

over however, and this issue will be further examined in the section of this chapter

devoted to high definition (see 4.2).

In this same branch of the Canadian system (pay and specialty), there have also been

significant regulatory developments in the area of Pay-per-View. This relatively new

area of the broadcasting system has proven very popular and profitable for BDUs and

PPV providers. The growth of digital technology has made PPV far more accessible.

Pay-per-View offers a limited menu of programming generally concerned with major

spectacles such as concerts, one-off sporting events like boxing and wrestling

matches, Hollywood movies, and adult programming. Subscribers pay by the

program, unlike general pay services which offer a dedicated channel. The money

from these services is entirely generated by subscription rates and does not rely upon

ad revenue. This sector contributes very little to Canadian production: $24, 000 in

2007 Canadian programming expenditures, as opposed to over $900, 000 spent by

pay and specialty services (CRTC, 2008, p. 150). Given the profitability and relative

ease of production, it is clear why BDUs find this service attractive. Unlike Pay TV,

which was and remains part of the analogue system, PPV is a service only available in the Canadian home via digital BDU technology. PPV and Video on Demand (a

similar product but with a much broader range of programming) could not prosper in

an analogue system where broadcasting must follow a schedule and carrying capacity

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is more limited – these services are only available to households already receiving

digital BDU services such as Rogers Digital Cable and Shaw Direct.

For the CRTC, it is difficult to find the public interest inherent in PPV. It is a

consumer service that offers little to the betterment of the greater system other than

profitability for providers. The increasing appeal of high definition programming

means PPV takes up bandwidth which could provide other services, especially in

DTH satellite which generally has a more limited capacity than digital cable. The

BDUs are predictably reluctant to accept any restrictions on this profitable branch of

their industry. In 2004, the CRTC policy stated that given the greater amount of

bandwidth required by HD services, there would be a reduction in the number of

channels used by a multiplexed HD pay-per-view television service that are

guaranteed distribution. It was a substantial decrease from ten to three (CRTC 2004-

58). The cable industry, represented by the CCTA, predictably objected and called

the policy "highly inappropriate and customer-unfriendly" (CRTC 2006-74). But the

CRTC remained consistent in their 2006 review of the policy:

Given the greater amount of bandwidth required by HD services, the

Commission reduces the number of channels used by a multiplexed HD pay-

per-view television service that are guaranteed distribution from ten to three,

as proposed in Public Notice 2004-58. (CRTC 2006-74).

Because pay and specialty are only available via BDUs, regulations for that sector have a strong impact on pay and specialty broadcasters. A later CRTC announcement

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regarding BDU regulation also had significant implications for pay and specialty services. The Regulatory frameworks for broadcasting distribution undertakings and discretionary programming services (CRTC 2008-100) made some moves toward lifting the regulations involving genre exclusivity that had been part of the analogue system. News and sports specialty services will be the first to lose genre protection.

Under the new regulations the CRTC would

…introduce competition in those genres where it is convinced that a

competitive environment will not significantly reduce either the diversity of

services available to viewers or their contribution to the creation of Canadian

programming.

… the Commission has examined the current environment and determines that

it would be appropriate to immediately introduce competition between

Canadian services operating in the genres of mainstream sports and

mainstream national news. (CRTC 2008-100)

While not eliminating genre exclusivity entirely, the CRTC did begin the process of opening the historically protected world of pay and specialty television. According to the regulations set forth in this ruling, it was possible to do so without compromising the traditional public interest objective of diversity, nor causing harm to the Canadian production industry. Given the exponential growth in channel possibilities afforded by digital technology, few involved should have been shocked by this ruling.

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Thus, the regulations for pay and specialty digital television have been witness to the threats, pandering, posturing, and compromises that are a standard part of the CRTC operating procedure. Industry, as represented by the CAB, could claim some success in achieving a lessened level of initial HD programming, while the CRTC could state it held firm on the same issue – the requirements had simply been amortized over the length of the transition licence. There was a regulatory retreat but not policy capitulation. In the area of Pay-per-view the regulator held firm to its position, much to the dismay of BDUs, who likely saw this as a temporary setback until increased compression technology and the fully digital system frees up the required spectrum space to allow for increased levels of high definition pay-per-view.

4.2 High Definition Television (HD)

The regulatory structure surrounding high definition has been the site of strong

disagreement, both between industry and the CRTC, and among some non-

broadcasters with commercial interests in the outcome. The CRTC remains clear that

a high definition digital television system is the final goal of the digital transition,

although as the digital transition has progressed there have been significant changes

in the regulatory structure surrounding HD. The decision to place HD requirements

as a condition of transitional licences has impact on all sectors of the industry. For

OTA broadcasters, this means a substantial investment in transmission and recording

equipment; for BDUs this requires dedicating a large portion of bandwidth space to

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HD programming; for pay and specialty there is an obligation to deliver broadcasts to

BDUs that are of HD quality, as well as problems in adapting the older television

programs that regularly provide the inexpensive content for specialty channels; there

are also obvious equipment-related expenses for the independent production industry,

particularly the smaller budget programming such as documentary producers.

Thus the regulatory structure for high definition broadcasting overlaps with all areas

of the Canadian broadcasting system. HD levels have proved a strong sticking point

in establishing regulations for the digital transition. This portion of this chapter will

address many central issues surrounding HD regulations, but the debate surrounding

HD will surface in many regions of the transitional regulatory structure.

In the hearings preceding the 2006 Regulatory framework for high definition pay and

specialty channels, the BDU sector, represented by the CCTA, strongly opposed the very concept of establishing HD as the replacement technology, and reiterated its stand against establishing a firm deadline for the transition. They offered numerous reasons for this resistance to what the CRTC had repeatedly stated as the final goal of the transition (all high definition):

….the CCTA submitted first that many cable systems will continue to operate

hybrid analog-digital systems for a number of years, for reasons of regulation,

cost and customer convenience. Second, some cable systems have already

duplicated channel line-ups in both analog and digital, and intend to use this

model to build customer loyalty. Third, a significant percentage of specialty

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and pay programming is not, and in some cases may never be, in HD. Fourth,

the CCTA submitted that, while some cable systems may quickly convert to

an all-digital platform, most distributors are not in a position to carry all the

existing channels in HD, even if such content were widely available.

(CRTC 2006-74)

There was virtual unanimity among broadcasters that the HD requirement levels were too high. As demonstrated in 4.1, there was some movement by the CRTC in the

2006 Regulatory Framework for the Licensing and Distribution of High Definition

Pay and Specialty Channels on this issue in regard to specialty channel transition licences, but the final target levels of HD remained unchanged.

There was by no means private sector consensus in calling for lower target levels of high definition. Industries outside the usual broadcasting voices at the CRTC hearings also have a vested interest in HD levels and called for the CRTC to hold firm and even increase HD obligations. It was a hardware manufacturer, LG Electronics, who called for a stronger regulatory plan and for a firm date to complete digital transition to be established (CRTC 2006-74). The electronics industry has witnessed a strong growth in the sales of the television sets equipped to display high definition signals and saw firm regulation as a way of ensuring continued growth. Television manufacturers already had support from Industry Canada, who already signalled to the CRTC in 2006

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..that Industry Canada will amend its technical rules to require that, as of a

certain date, all new television sets and other consumer apparatus capable of

receiving OTA television signals, include built-in ATSC tuners. The effective

date for bringing into force of such a requirement will be determined in

connection with the establishment of a date for the shut down of OTA

analogue TV.

(Industry Canada, 2006a)

Thus, the electronics industry had a very strong stake in these CRTC rulings.

In the regulatory framework (CRTC 2006-74), the CRTC continued to emphasize the future role of HD in Canada and expressed an overarching faith in market mechanisms for achieving this objective.

….the Commission considers that the framework set out in this public notice,

along with the expectations of viewers, will provide appropriate incentives for

the pay and specialty services to proceed with the transition. Accordingly, the

Commission will not at this time mandate specific deadlines for the transition

of the pay and specialty services to HD. (CRTC 2006-74)

Thus, even after establishing the regulatory framework in 2006, Canada still had no set schedule for specialty services to convert to HD, nor a clear OTA analogue shut

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off date. The decision to defer on the issue of establishing any regulatory decisions on deadlines would prove controversial and later necessary to revise.

Despite the seeming intransigence of the CRTC on this issue, the position of HD was not yet finalized. There was a rather stunning regulatory about–face by the CRTC buried within the 2008 Regulatory framework for broadcasting distribution undertakings (BDUs) and discretionary programming services:

In light of the significant growth in the production of Canadian HD

programming, the Commission considers that market forces will be effective

in ensuring that Canadian viewers have access to HD services. Further,

considering that BDUs will have to expand their bandwidth capacity

significantly to accommodate the demand for HD services, the Commission is

of the view that a change to the HD framework is appropriate.

Accordingly, the Commission determines that the requirement for BDUs to

distribute Category A (channels with access rights, not Category 2 digital)

services on a digital basis will apply to either a standard definition (SD) or HD

version of the service. The Commission is of the view that this will be

sufficient to ensure distribution of Canadian HD services where such services

are made available to BDUs. As a result, the relevant policies respecting HD

transitional licences set out in Broadcasting Public Notice 2006-74 will not be

included in the amended BDU Regulations. Licensees will continue to be

permitted to offer HD versions of their services via condition of licence.

(CRTC 2008-100)

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This determination constituted a major victory for incumbent broadcasters and a substantial concession for the CRTC, which had held fast to fixed HD requirements for all programmers since the beginning of the digital transition. Now the specialty broadcasters would maintain their privileged position even if the programming were in standard definition (SD) – something the previous policy structure had been explicitly opposed to supporting. The complex model of incrementally increasing

HD requirements for pay and specialty over the span of the transitional licence, as stated in CRTC 2006-74, found itself cast aside two years after its inception.

This decision cited a 2006/2007 study by the Canadian Television Fund which

showed Canadian HD production increased from 7% in 2003/2004 to 30% in

2006/2007. English-language HD production represented 44% of all English- language production in 2006/2007. The logic behind the regulatory shift was that by

2008, broadcasters were under increasing market pressures to provide HD, and the production community had increased HD production. Given the CRTC’s repeatedly emphasized position to regulate only when market pressures proved insufficient, taking away rigid requirements seemed appropriate if it could be done without compromising the desired objective of an HD system. With this dramatic determination, the Commission removed itself from deciding where standard definition fits into the digital transition model for discretionary services. The regulations in this case were a far cry from the policy outlined in public notices released in 2002 and 2003.

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4.3 Broadcasting Distribution Undertakings (BDUs)

It should come as no surprise that the development of regulations for BDUs has been

the primary site of industry squabbling during the digital transition. The power of

cable, and later DTH satellite providers, has been growing for decades and the digital

transition has the potential to consolidate their hold on power within the Canadian

system. The enormous expansion in choice afforded by digital television is largely

restricted to those with cable and satellite access - yes, there will be OTA service but

the early indicators are that OTA providers will be few and relatively poorly financed.

Most broadcasters and program creators will live or die by their access to cable

distribution. Given the dominance of a relatively few players in this area, and its

central position for other actors within Canadian broadcasting, increased reliance

upon market forces for BDUs is a much more precarious proposition for the greater

system than the relatively non-essential broadcasts of pay and specialty channels.

The regulations for BDUs are complex and wide-ranging, and this chapter will examine some of those which affect the overall viability of the digital television

project in Canada.40

As channel selection increases via digitalization, so does the BDU power to package

certain channels or allow consumer selection from an a la carte menu of options.

Traditionally, the CRTC has established tiers to package channels in such a way as to promote genre protection and ensure obligations of the Broadcasting Act are being

40 Some issues such as consent from broadcasters for their signals are significant but will not be addressed here as they constitute more of an inter-industry issue and less a public interest concern.

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met. In the hearings which followed the 2004 call for comments on the proposed

regulatory framework, BDUs, represented by the CCTA, submitted that the

Commission's application of traditional must-carry rules fails to address the realities

of the market, and is "inappropriate for a number of reasons" (CRTC 2006-5). BDUs

requested that they be given complete discretion as to which HD channels receive

carriage. Shaw in particular proposed that there be no carriage obligations imposed

on BDUs with respect to the distribution of HD services, either during or following

the transition to digital distribution. Rather, Shaw considered that consumer demand

and the capacity of each cable system should determine whether a particular HD

service is distributed by a BDU (CRTC 2006-74). Obviously, this approach would

place broadcasters at the whim of the BDUs and they in turn protested this position.

In this case, the CRTC ruled against the BDUs and maintained must-carry obligations

(CRTC 2006-74). The CRTC also determined that tiering of specialty services

would continue, yet did not completely rule out individual selection. The 2006 Digital

Migration Framework states:

Accordingly, in a digital environment, each specialty service will have to be

offered in at least one theme package or an all-in package before it may be

offered on a stand-alone or pick-a-pack basis. (CRTC 2006-23)

BDU hearings pertaining to the digital transition have been strongly contested and reveal the increasing power of BDUs within the Canadian system. According to

some broadcasters, BDUs have been flaunting the digital policies established in the

regulatory framework for the distribution of digital television signals (CRTC 2003-

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61). This division between the industries was brought to the fore during a licence renewal hearing for Star Choice satellite distribution in 2004. Shaw, the parent company of Star Choice, was the source of much discord within the greater industry as the digital transition progressed.

In the 2004 Shaw licence renewal hearings, the CAB alleged that Star Choice was taking HD signals it received from several different Canadian and non-Canadian television stations and programming services and compiled this programming into as many as five omnibus HD channels. In essence, the broadcasters charged that Star

Choice was rearranging their broadcasts to suit their spectrum space, in effect making them programmers and not broadcasting distributors (CRTC 2004-130). This, the broadcasters argued, was a clear violation of the Broadcasting Distribution

Regulations (CRTC 1997-150). In its determination, the CRTC reminded Star Choice

…section 7 of the Regulations prohibits a licensee from altering or deleting a

programming service in a licensed area in the course of its distribution except

as required or authorized under a condition of its licence or the Regulations.

Canadian programming undertakings and authorized foreign services

providing HD programming are distinct services and, like standard definition

television services, must be distributed in their entirety on dedicated channels,

unless otherwise authorized by the Commission. (CRTC 2004-130)

Star Choice received its licence renewal but with a clear warning from the regulator that it not overstep its regulatory boundaries.

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Shaw and Star Choice were again the source of industry dissention in 2008. This case had to do with the Canadian regulatory practice of simultaneous substitution – a policy which has come under scrutiny in recent years. The rule is very much a product of the fixed-scheduled analogue era – BDUs were ordered to insert the advertising of local OTA broadcasters on American broadcast signals of shows shown simultaneously. The purpose of the 30 year old regulation is to provide extra revenue for OTA broadcasters to compensate for their greater transmission expenses and lack of access to the fee for carriage afforded the specialty channels. This method of protecting local programming rights was far more feasible under the analogue regime when schedules were rigid and areas of reception, even on cable, relatively localized. A 2003 study by the industry group CDTV found that it was technologically possible to continue the practice in an all-digital environment (CRTC

2003-61).

Dunbar & Leblanc’s report found the policy results in Canadian programming being pushed off prime time so that Canadian broadcasters can reap extra revenue when broadcasting American programming. The 2007 Report observes:

In a very real sense, simultaneous substitution appears to be dictating the

scheduling of Canadian English-language OTA television networks – pushing

Canadian programs into non-peak viewing periods or into the summer

months.

(Dunbar & Leblanc, p. 49)

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Current controversy notwithstanding, the simultaneous substitution rule is still in

place for BDUs, and Shaw has been accused of failing to comply. This dispute is also

indicative of greater issues concerning distant signals – an advance made possible by

the digital technology involved in DTH transmissions.

At a licence hearing entitled Various cable broadcasting distribution undertakings in

western Canada -Short-term licence renewals and licence amendments, the CAB once

again brought a complaint forth against Shaw companies, claiming they had

consistently failed to carry out simultaneous substitution on behalf of local stations

vis-à-vis the distant Canadian signals that are distributed in local markets via DTH

satellite signals (CRTC 2008-234). The basic question was: does the BDU have an

obligation to protect the programming rights of the local stations, via simultaneous

substitution, even if the signal is coming from another part of Canada, not the U.S.?

The CRTC ruled in favour of the broadcasters local rights and ordered that “Shaw is

required to immediately conform to its regulatory obligations with respect to

simultaneous substitution” (CRTC 2008-234).

The digital environment’s greater opportunities for choice require regulatory

reinforcement for those channels which receive must-carry status on BDUs. In 2006,

The Digital Migration Framework established that all BDUs must carry the 9(1)(h)

services (TVA, APTN, CPAC and VoicePrint) “in their basic service offerings,

whether their system is analog, digital or a hybrid” (CRTC 2006-23). Given the changing capacity of BDUs, the CRTC used the western Canadian cable licence renewal to clarify the must-carry obligations of terrestrial BDUs (cable) across the country:

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Accordingly, the Commission will amend the BDU Regulations so as to

require terrestrial BDUs to distribute the following priority services on the

basic service (the order of services establishes priority for simultaneous

substitution purposes, where applicable).

locally-owned and operated English- and French-language CBC television

stations broadcasting in the market served;

the educational television programming service, the operation of which is the

responsibility of an educational authority designated by the province in which

the licensed area of the undertaking is located (provincial educational

programming service);

all other local television stations;

regional stations owned and operated by the CBC, if no local CBC stations are

already carried;

all other regional stations, other than those regional stations affiliated with

local stations of the same network already carried;

at least one owned and operated or affiliate CBC English-language television

station and one owned and operated or affiliate CBC French-language

television station, if not already carried; and

services mandated for distribution on the basic service pursuant to an order

under section 9(1)(h) of the Act. (CRTC 2008-234)

The must-carry obligations of DTH are much more complicated. Given that the satellite footprint is national, it is not feasible for DTH providers to carry every local

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channel across the country. As a compromise, in CRTC 2008-100, the CRTC ruled that a reasonable approach would be to require distribution, on the basic service within each province, of a selection of provincially-based local television stations, including educational services. Specifically, DTH undertakings would be required to distribute one television station per province, where such a station exists, from each of the major broadcast ownership groups: CBC English, CBC French, Canwest, CTV,

Rogers, TQS and TVA.

These BDU licence hearings offer an informative glimpse into the divisions that exist within the industry, as well as some of the licensing challenges posed by changing digital technology. In more than one instance, the CRTC saw the BDU as overstepping its position within the greater system and assuming powers it has not been granted. Shaw has, on multiple occasions, been accused of over-stepping its role as distributor and had to be reminded of its place by the regulator. These disputes may very well have been a case of BDUs testing the limits of their authority in the emerging digital structure.

From a perspective of the public interest, the key issue at stake in BDU regulations is the matter of public access and diversity of opinion. The vast majority of Canadians receive their signal via BDU which makes the industry a powerful gatekeeping force.

As the divisions within the early industry groups clearly demonstrated, and the regulatory process has reinforced, splits between distributors and broadcasters can prove difficult to bridge.

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4.4 Over-the-Air Broadcasting

No area of the Canadian broadcasting system receives as much rhetorical support

from the regulator as the OTA broadcasting sector. Accolades such as “cornerstone

of the Canadian broadcasting system”, “window on the world”, and “essential part of

a successful broadcasting system” are commonplace (CRTC 2008-100). However,

actual regulations to strengthen this foundational sector have proven far more varied

in their tangible benefits to OTA broadcasters.

In Determinations regarding certain aspects of the regulatory framework for over- the-air television (CRTC 2007-53) the CRTC refused to impose fee-for-carriage requirements for BDUs who broadcast OTA signals (a development OTA broadcasters argued was necessary for their financial survival) but lifted all

restrictions on advertising minutes per hour as of September 2009. These two

decisions demonstrate the give and take of OTA regulation, but are not necessarily

unique to the digital transition.

By its own admission, the CRTC did not adequately prepare for OTA digital

broadcasting in its key 1999 television policy platform, Building on Success - A

Policy Framework for Canadian Television (CRTC 1999-97). Despite the fact that

the digital transition was underway in the United States and Canada in 1999, in this

document the CRTC paid scant regard. Of the 136 paragraph points of the policy

framework, five were devoted to the challenges of digital television. The subsequent

decade has seen Canada fall further behind its initial goals for the digital transition, in

particular regarding OTA broadcasting. In 2006, the CRTC faced the reality that

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…the 1999 Policy did not anticipate the rapid consumer acceptance of high-

definition (HD) television receivers or the slow pace of transition to digital on

the part of Canadian OTA television. It is now estimated by Canadian Digital

Television, an industry organization that provides information on the

implementation of HD television in Canada, that the Canadian transition to

digital is lagging behind the U.S. by at least four years. (CRTC 2006-5)

The same report expressed concern that Canadians who watched American broadcasts

to access the wealth of HD programming, might prove difficult to “repatriate” back into the Canadian system, “even when Canadian programming is available in HD”

(CRTC 2006-5). The same OTA television services described by the CRTC as an essential cornerstone have borne the brunt of the difficulties caused by shifting technological and economic realities, a problem furthered by a largely inadequate policy regime.

In 2008, the CRTC issued a licensing decision for an applicant unique to the

emerging digital system: a Canadian, all-HD over-the-air national broadcaster. In

Broadcasting Public Notice 2007-62, the Commission issued a call for applications

from parties wishing to obtain OTA digital/HD broadcasting licences in markets

across Canada. HDTV Networks, led by digital radio owner John Bitove, responded

to the call and proposed an over-the-air fully high definition network based out of

Vancouver to compete with established national networks CBC, CTV and

Canwest/Global. In its application, HDTV stated it had no plans to broadcast local

programming, and that it would not solicit local advertising. This key factor triggered

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an outcry from broadcasters that this would constitute an unfair advantage over broadcasters mandated to provide local programming.

The application for the HDTV network was rejected by the CRTC.

This decision speaks to the role of maintaining structures set under the analogue paradigm, the increasing appeal of HD programming, the continued difficulties of maintaining local programming in a way which is financially viable, and the power of incumbent broadcasters.

The Commission has not accepted a model of national distribution without

significant local programming content as being appropriate for Canada as it is

inconsistent with the Commission's overall OTA policy. It would be untenable

and fundamentally unfair to allow HDTV Networks to be relieved of the local

content obligation (or accept a minimum of two hours per broadcast week per

region) while insisting that others provide an average of 22 hours of local

content per broadcast week. (CRTC 2008-75)

In the dissenting opinion of Vice-Chairman of Telecommunications Len Katz,

Commissioner Katz challenged the position of his colleagues and thought the benefits of the proposed network far surpassed the local programming problems.

I do not believe it is contrary to the Broadcasting Act or its accompanying

regulations to allow new entrants some period of time to establish themselves

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prior to holding them to the same conditions as well-established industry

participants.

…To force everyone into the same box is to deny entrepreneurs the ability to

innovate. (CRTC 2008-75).

Katz’s objection has regulatory historical precedent. Broadcasting upstarts like PPV,

Video-on-Demand, mobile television, and the entire Canadian on-line community have enjoyed relaxed regulatory oversight, if not outright exemption, in an effort to encourage their development. However, in this case the entrenched power of the established industry proved very difficult to overcome. There were no further offers to develop a national digital OTA network.

The most significant regulatory change by the CRTC in regards to OTA digital

television is the establishment of a clear ASO date. Pressure from the American

ASO, Industry Canada, hardware developers, and the general confused state of this

key element of the transition eventually forced the hand of the CRTC. In the 2007

Determinations regarding certain aspects of the regulatory framework for over-the- air television (CRTC 2007-53), the CRTC obviously recognized the limitations of the

market-driven approach and mandated a date of August 31, 2011 as the shut-off point

for analogue over-the-air transmissions. This was a clear admission of the

inadequacy of the policy structure at this point in the digital transition.

The Commission had previously imposed no fixed deadline for the conversion to

digital, preferring instead to rely on a market-driven approach. Noting that the pace of

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transition had been very slow, and that Canada was lagging considerably behind the

U.S. in this area, the Commission determined that:

• A mandatory shut-down date of August 31, 2011 should be adopted for

analog television transmission. OTA licences will only be authorized for

digital transmission after that date. This policy may be subject to exception in

northern and remote communities where no digital OTA will be provided.

• The construction of OTA digital facilities is at the discretion of licensees.

However, privileges such as priority carriage and simultaneous substitution

will be retained in respect of digital services only, in order to encourage the

provision of local and regional digital OTA services.

• OTA television broadcasters will be required to file digital roll-out plans in

their licence renewal applications. (CRTC 2007-53)

With this one announcement the CRTC significantly altered the dynamic of the digital television transition. In an interview, Michael McEwen praised the efforts of the CRTC in seizing the initiative and setting a clear date, however, he was clear that this should not have been the CRTC’s responsibility in the first place:

Frankly, it’s not up to the CRTC to put a deadline. It wasn’t the FCC (in the

U.S.) that put the deadline in, it was Congress. …Congress took the

responsibility, that’s what should have happened in our case. …Bless the

CRTC, they’ve gone out on a limb on this.

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(McEwen, personal interview: April 23, 2009)

With this regulation in place, the Canadian broadcasting industry could move forward in the transition. Other details for OTA broadcasters would be addressed at individual licence hearings scheduled for 2009. Despite predictable objections by industry, the

CRTC has held firm and Konrad von Finckenstein has told broadcasters the date “is carved in stone” (von Finckenstein, 2008).

Conclusion

The regulatory structure surrounding the digital television transition has not drastically veered from the overall course set by the earlier CRTC policy statements; however, there have still been significant changes in some sectors. While overall goals have remained constant, the means of getting there have shifted.

The most notable concessions were made for the pay and specialty services – a part of the industry which had already seen substantial increases in profit over the last decade. The first compromise from the stated policy came when the HD requirements were spread out over the length of the transitional licence, the second dramatic shift was in 2008 when the CRTC removed the HD condition entirely and allowed for standard definition digital broadcasts. These somewhat contradictory moves demonstrated a faith that public demand for HD would do more to incite the industry than regulation. The dramatic 2008 decision was consistent with the June

2006 Order in Council which preceded The Future Environment Facing the Canadian

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Broadcasting System, which specifically stated “the Government favours a smart regulatory approach”, which could also be interpreted as regulating as infrequently as possible (CRTC 2006, appendix 2).

Disputes between broadcasters and BDUs continued, as BDUs sought to extend their influence in the digital environment, and the CRTC was called upon to bring order to the industry. The strength of cable and satellite providers has continued to grow, largely at the expense of OTA broadcasters. In 2007, OTA national broadcaster

Canwest Global took on a huge debt when the CRTC approved its purchase of

Alliance-Atlantis for $2.3 billion (CRTC 2007-429). Canwest believed the financial risk was worth the reward of establishing itself in the lucrative pay and specialty sector, given the shrinking fortunes of the OTA sector.

For OTA services, and perhaps the greater system as well, the key change was the establishment of a clear ASO date. Over the protests of some in the private sector

(see CTV, TQS, Shaw in CRTC 2007-53) the CRTC determined that regulatory certainty in this area was required. The federal government had given no indication that it would step in and establish a clear action plan, despite criticisms from the

Heritage Committee in 2003 and Canadian Digital Television chair Michael McEwen in 2006.

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The following chapter will take a closer examination of the CRTC practice of deferring to industry groups and the greater phenomenon of self and co-regulation as it relates to the digital television transition.

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Chapter Five: Self and Co-Regulation and the Digital Television Transition

The policies and regulations thus far for digital television in Canada are largely the product of an on-going dialogue between industry and the regulator. It is clear after examining the process and progress of digital television policy and regulations that earlier criticisms of top-down or command-and-control regulation are inappropriate in this case. Industry has been directly involved and engaged every step of the way and

the CRTC has made efforts to minimize its own involvement. What is less clear is

how this particular policy process has challenged the traditional role of public

participation in the development of broadcasting policy.

The CRTC and the Canadian government have actively solicited external

contributions, primarily from industry, for the development of digital television

policy. For key parts of the digital transition, industry was not only asked for

comment or contribution, but to create the actual policy plan. This can be viewed as a

next step in the governance of Canadian broadcasting – a widening of the actors

involved and a loosening of the grip of the regulator. Governance implies an opening

of the policy process to a broad selection of actors, including industry, civil society

and others. Proponents of this approach believe it is better suited to the multinational, multi-player reality of many contemporary political issues (Schulz & Held,

2004; Ofcom, 2004).

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While there is much that is intriguing about the idea of governance, there are also substantial caveats. After decades where neoliberal economic policies in many countries resulted in decline in the public services offered by their governments, the notion of governance can signify that elected officials are neglecting their duties, or contracting out. In addressing this issue, both Kjaer and Rhodes, in separate studies on governance incorporate the same quotation from an article by Jerry Stoker, who asked whether governance is “the acceptable face of spending cuts” (Kjaer, p. 12;

Rhodes, 1997, p. 47). An example of this effort to expand the policy options for regulators has been the increased implementation of self and co-regulatory policies.

The idea of allowing the industry to autonomously regulate itself (self-regulation) or

in conjunction with government (co-regulation) raises legitimate questions

concerning the innate power structure within the system and the pursuit of public

interest objectives.

Self and co-regulation can be seen as part of the greater worldwide shift toward multi-

stakeholder governance in the public sphere – a phenomenon which has grown in recent decades.41 In a 2004 book entitled Regulated Self-Regulation as a Form of

Modern Government, Wolfgang Schulz and Thorsten Held examine applications of

co-regulation in the media policy of several different countries from Europe to

Australia and Malaysia and examine its increasing worldwide acceptance. They also

reference the Canadian example and note “Further investigation into the experience

accumulated might be fruitful…” (Schulz & Held, p. 55). While many of the current

applications for broadcasting are relatively recent, and critical studies of the field in

41 In a 2007 interview, Damian Tambini described co-regulation as “in vogue at the moment”.

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Canada generally underdeveloped, co and self-regulation are by no means new to

Canadian media. The Canadian advertising industry has employed self-regulation since the 1950s (Advertising Standards Canada, 2006/2007), and in Missed

Opportunities Marc Raboy observes “The CRTC had experimented with industry self-regulation since 1979” (1991, p. 312).

While the arguments over co and self regulatory semantics can prove tiresome, there are important differences (Hrvatin, Co-Regulation of the Media in Europe). For the purposes of broadcasting, the split is significant in that the self regulatory system keeps the regulatory mechanism clearly in the private realm; whereas, by definition, co-regulation is open to a wider array of voices, and the government still holds ultimate authority. Distinct from self-regulation, which is industry initiated and administered (as in the medical profession), co-regulation is typically a government

initiative that allows for considerable industry autonomy under clearly defined

parameters set out in a statutory framework, such as the Broadcasting Act. In a co-

regulatory structure the government has less direct involvement but remains in a

position of authority via legislation and the threat of punitive action should regulation

not be followed.

In an interview at the Hans Bredow Institute, German media scholar Wolfgang

Schulz clarified this position:

It is essential the industry feels there is an incentive because it involves costs.

Co and self regulation means regulatory costs are partly shifted from the state

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to industry bodies. Self regulatory bodies need the heavy stick in the

background. The state has to be there.

(Schulz, personal interview, August 13, 2007)

Stefaan Verhulst (using ‘self-regulation’) echoed these concerns:

You can only have successful self regulatory regimes if you have a carrot and

stick. The carrot quite often is the profit maximization (ie – you will be able

to sustain your business because your customers will trust you and will

remunerate your value). …The stick quite often is always the shadow of

government. Self-regulation works if industry is willing to make the

investment, there is a cost, this is the carrot – it is worth the investment. If

there is no shadow of government, “If you don’t do it we will step in and put

a regulatory regime in place that might harm your current way of business”, if

that is not present then there are too many free riders. If there are too many

free riders a self-regulatory regime collapses because it cannot govern itself.

(Verhulst, personal interview, June 29, 2007)

Thus, it is clear that co-regulatory theory involves a necessary role for government in this regulatory paradigm. Co-regulation is not a “free ride” for industry, but a way of making industry assume responsibility for some of the regulatory burden. The “stick” of government must always remain in the picture.

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It is appropriate to ask if the regulatory position thus far in the Canadian digital television transition can be best defined as ‘self’ or ‘co’ regulation, since the difference has strong implications for the continued role of government, and therefore democratic imperatives, within the broadcasting sector. Despite the common (and by this dissertation’s definition, inaccurate) use of ‘self-regulation’ in much of the literature, this chapter will primarily defer to the term ‘co-regulation’ (commonly used in the European model) as it is generally a more apt description in the Canadian context.

Certainly not all areas of traditional government control are viewed as appropriate for co-regulation. In their study on regulated self-regulation, which “…implies that the state should abandon its role of hierarchal control, and instead aim to influence the process at work in society” (3), Schulz and Held stipulate that one of the conditions for self-regulatory policy must be that “the objective is not so fundamental that the public insists on traditional command and control regulation” (Schulz & Held 2004, p. 61). Another EU study, the Mandelkern Report, echoes these concerns: “Co- regulation cannot be used in all areas. This is particularly the case where safety, fundamental rights or citizen equality are at stake” (Mandelkern, 2001. p.17).

The question of “citizen equality” cuts to the heart of the public interest debate in broadcasting. Obviously questioning the “fundamental” nature of Canadian broadcasting, and its relationship to citizenship, is paramount. Former Australian

Broadcasting Authority Vice-Chair Gareth Grainger stated categorically in a 1999

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speech in Montreal: “…co-regulation is a sound approach to take with a mature industry such as broadcasting” (Grainger, 1999). For the purposes of this

dissertation, a key question concerning co-regulation asks: is digital television merely

a replacement technology for an already established, therefore mature industry or

does it present new challenges to fundamental democratic principles, traditionally

served by broadcasting policy, that are not as well-suited to co-regulation?

Even if co-regulation fulfills its ideal and widens the policy arena to include the input

of non-commercial voices, there are still concerns regarding equality of access. One

study of the increasingly co-regulatory approach within the UK notes: “Politically,

the new regime suggests a democratization of power, a renewed importance for civil

society, and a devolution of the role of the state” (Livingstone et al., p. 64); however,

doubts remain if the inclusion of civil society groups truly enhances the democratic

nature of communication regulation. The same study also noted “the limited capacity

of civil society organizations to invest time in consultations, attend meetings, lobby

the regulator and conduct independent research” (ibid, p. 74) - a problem not shared

by corporate lobby groups. This chapter will seek to address how co-regulation

alters the traditional power dynamic in the Canadian process, in particular those

voices outside the commercial interests.

The importance of co-regulation in Canadian broadcasting was expressed by the

CRTC chair Konrad von Finckenstein in a May, 2007 speech: “We at the CRTC are

strong believers in the usefulness of self-regulation in the industry. …Over the next

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five years I will be encouraging the industry to improve our broadcasting system

through self-designed initiatives and self-made rules” (von Finckenstein, 2007). One

may argue that von Finckenstein is promoting the virtues of self-regulation, but, since

the impetus is coming from the regulator and not industry, one could associate this

initiative with co-regulation; nevertheless it is clear that the CRTC sees its mandate to

opt-out of regulating whenever possible. It is legitimate to ask if self-designed rules and initiatives will offer the same benefit for the citizen as it would if it were coming

from elected officials or an arm’s length public regulator, such as the CRTC.

Given the mandate for the CRTC to uphold the public interest objectives inherent in

the Broadcasting Act, there are key questions regarding the scope of co-regulation

within the wider system and its effects on the place of media in a functioning

democracy. Does co-regulation permit for the expansion of private interests into the

public realm, potentially restricting entry into this essential democratic space, as some

authors have argued?42 Shalini Venturelli is scathing in her condemnation of

European co and self-regulation for reason of democratic accountability: “The self-

regulating forces of proprietary relations are given a central place in the information

society and define a dimension of life that functions outside the political constitution, rendering the practice of democracy an anachronism” (Venturelli 1998, p. 231).

42 It is worth noting that the CBC was represented in many of the co-regulatory bodies involved with the digital television transition – thus, a case may be made that not all interests are therefore “private”. However, CBC television is in fact a public/private hybrid and pursues many of the same advertising dollars as private broadcasters; therefore, it is not a stretch to place the CBC among the private interests.

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This chapter will examine the theory behind self and co-regulation and discuss the

root of its appeal in contemporary regulation, then analyze the role co-regulation has

played in the Canadian digital television transition, including addressing the question

of whether the Canadian experience is best described as self-regulation or co-

regulation. Is co-regulation merely a cheaper, more industry-friendly way to construct

digital television policy, with elements which could be seen as beneficial to the public

interest? Or are there, as Venturelli argues, legitimate concerns for the effectiveness

and responsiveness of democratic systems? There will be comparative use of UK and

the greater European broadcasting policy, where co-regulation has taken an

increasingly prominent place.

5.1 The Theory of Co-Regulation

Offering a precise definition of co-regulation is not easy. A 2003 publication from the

European Audiovisual Observatory entitled Co-Regulation in the Media in Europe

emphasized that co-regulation is “particularly ambiguous” (Palzer, p. 4) and “not

clearly defined” in the case of UK regulation (Prosser, p. 59). In their seminal 2004

study, Regulated Self-Regulation as a Form of Modern Government, Schulz and Held

use the awkwardly phrased “regulated self-regulation”, which the authors write is also

known as ‘co-regulation’, ‘audited self-regulation’, ‘self-regulation’, ‘enforced self-

regulation’, and the seemingly contradictory ‘enforced voluntary regulation’ (Schulz

& Held: 4) . Such widespread uncertainties have not hindered the global growth of co-regulation as a policy tool. European scholar Tarlach McGonagle observes,

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“While the concept of co-regulation remains in the nursery, its future growth does

seem assured” (McGonagle, p. 8).

Ideally co-regulation expands the number of actors in the policy process and grants

industry greater autonomy with which to respond to problems in the field. It is an

approach consistent with the general neoliberal philosophy of smaller government.

Co-regulation can be viewed in accordance with a statement from the Organization

for Economic Co-operation and Development (OECD) in 2005:

With the move towards convergence, regulators should rely more on market

forces than in the past. Markets often evolve more quickly than regulators can

act and this may highlight the need for regulators to move away from ex ante

towards ex post regulation.

(OECD, 2005).

Especially in the case of the digital television transition, it is believed that the

technical expertise of the private sector is required to fully comprehend the options

within the new technologies, and there has been general consensus by regulators that the growth of this area should not be hindered by ex ante regulation.

In theory, a co-regulatory system gives recognition to the voices of a variety of stakeholders in the policy process, including those civil society actors whose objectives are not market-based. From an industry perspective, co-regulation is portrayed as a means of reducing the bureaucracy to which media corporations have

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historically been subject, while helping governments establish competitive advantage for national commercial interests in the global media marketplace. As stated in its

2004 Criteria for Promoting Effective Co and Self-regulation, Ofcom observes that

co-regulation benefits include “preventative action, speed of action, flexibility and

improved decision making” (Ofcom, 2004). It is clear from the UK experience that the Canadian mandate of “smart regulation” in broadcasting is not unique. The new

UK broadcast regulator Ofcom has been mandated to adopt a “light touch” to

regulation, intervening only when absolutely necessary (Prosser in European

Audiovisual Observatory, 2003, p. 62).

Europe has been a central player in the rise of co-regulation in media and the amount

of scholarship and government studies are a clear reflection of the willingness to

explore the concept. The Commission of the European Communities White Paper on

‘European Governance’ expressed explicit intentions to develop co-regulatory

policies for European media (Commission of the European Communities, 2001); the

UK Communications White Paper of December, 2000 claimed co-regulation was ‘a

promising concept’; and the UK Communications Act of 2003 requires that Ofcom

explore ways of developing effective co-regulation (Ofcom, 2004).

For a co-regulatory system to function there must be clear parameters set by the

legislative authority. The divisions within broadcast media industries are so

pronounced, and the place of government essential for key foundations as spectrum

allocation, such that a fully self-regulatory system would serve no one’s interest. In

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a sector as ripe with normative judgments as broadcasting, it is essential that the

system in some way reflect the values of a given society. The power allotted to co-

regulatory regimes calls into question many of the foundational arguments of the

inherent publicness of broadcasting.

A key point of contention in the discussion surrounding co-regulation involves the

problem of regulatory capture. This is in essence the fear that the more open co-

regulatory process will become so dominated by one or more of the powers involved

that it becomes a more inclusive process in theory only. In an interview, Damian

Tambini of the London School of Economics observes “Self-regulation can work in

some areas; it’s less likely to work in other areas. It’s likely to be captured in some

areas, less likely to be captured in other areas” (Tambini, personal interview, July 6,

2007; see also Hans Bredow Institute for Media Research, 2006, 1.1; Tambini et al

2001). In the latter part of the first decade of the 21st century, it is this concern over capture that has challenged many of the earlier aspirations of co-regulatory policy in areas beyond broadcasting governance. In a 2008 Globe and Mail article concerning the greater applications of self-regulation in the financial marketplace, Eric Helleiner,

Chair in International Governance at the University of Waterloo writes: “The same private institutions that were assigned important self-regulatory roles over the past decade are now suddenly being severely criticized” (Helleiner, 2008).

The criticism that industry has the potential to hijack the co-regulatory policy process is not a new development. The expression “fox guarding the henhouse” has been

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used in more than one study (Hans Bredow, 2006, p. 1.1). In a discussion on

Canadian digital television, Michael McEwen observes that industry efforts to gain competitive advantage should come as no surprise:

Of course the industry is going to be self-serving. And they’re going to do

everything they can to protect themselves and their place in the market and

to reduce their costs.

Under the best circumstances, there should be a tension between (citizenship

and commercial concerns), but unfortunately industry hijacked the

argument. What that leads to is self-serving positions that only serve to

reinforce their current position. …We expect that from the industry – that’s

what industries do.

(McEwen, personal interview, April 23, 2009)

This is the reason studies of co-regulation have concluded that certain safeguards must be in place in order for the approach to remain effective – capitalists will, by nature, seek competitive advantage. The temptation is even greater given the increased industrial costs associated with co-regulation. Industry, not the regulator, must foot the bill for enforcement. When there are clear and enforced areas of control, there have been international examples of success in broadcasting co- regulation. In the case of Australia, a nation employing co-regulation “as much as possible” (Schulz and Held, p. 23), Schulz and Held found that regulatory objectives are achieved “actually better” (p. 32) under a co-regulatory paradigm than under traditional government control and at far less expense.

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Thus it appears there is some merit to an effectively run co-regulatory regime,

provided it may be structured in such a way as to avoid becoming dominated by the

deep financial resources of industrial interests – a substantial caveat, and one which

may not be achievable in all systems.

5.2 Self and Co-Regulation and Canadian Broadcasting Policy

“The sad fact is the media must self-regulate because most Canadians are not prepared to demand the press they need”.

Keith Davey. 1986. The Rainmaker: A Passion for Politics. p. 153.

The use of co-regulation in digital television is consistent with the regulatory arch of the CRTC in the period following the 1991 Broadcasting Act. The Commission has encouraged industry associations to develop, in consultation with their members and the Commission, codes of conduct and standards pertaining to broadcasting governance. Examples include the CAB Voluntary Code Regarding Violence in

Television Programming, CAB Sex Role Portrayal Code for Television and Radio

Programming, Advertising Standards Canada General Portrayal Guidelines for

Advertising, CAB Broadcast Code for Advertising to Children, and the Code for

Broadcast Advertising of Alcoholic Beverages.

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The Canadian application of co-regulation in broadcasting is unique in its use of

making co-regulatory industry standards a condition of licence. In Canada,

broadcasters are subject to conditions of licence that require licensees to comply with

specific industry codes. These conditions of licence are suspended if the licensee agrees to join, and abide by the decisions of, the Canadian Broadcasting Standards

Council.

The CBSC is the initial wedge of co-regulation within the Canadian broadcasting system. The areas of authority for this regulatory body involve the administration of five codes created and enforced by members of the Canadian Association of

Broadcasters (CAB).43 If a Canadian viewer has a complaint with content regarding

a Canadian broadcaster, it is first assessed by the CBSC; if the viewer is still not satisfied, he/she may take their objection to the CRTC. The benefit for the CRTC is avoiding the onerous task of dealing with public grievances over content, such as the overwhelming demands faced by the FCC, which deals directly with U.S. viewer complaints, after the infamous Janet Jackson ‘wardrobe malfunction’ at the 2004

Superbowl.

The launch of the CBSC in 1989 included the creation of a governing body composed of industry representatives as well as experts and local representatives from across

Canada - such a widening of the policy actors is very much in tune with the principles of co-regulation. The CBSC is operated under the auspices of private sector

43 The five codes are the CAB code of Ethics, the Sex Role Portrayal Code, the Violence Code, the Radio Television News Directors Association of Canada Code of Ethics, and the recent Journalistic Independence Code.

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broadcasters and, in co-regulatory fashion, is designed to complement, not replace,

the traditional work of the CRTC. It is self-regulatory in that the move was industry-

initiated, but it is clearly co-regulatory as the CRTC still maintains final authority and

can overrule CBSC decisions. The CRTC also remains ultimately responsible for enforcing the provisions of the Broadcasting Act and imposing sanctions on broadcasters if it deems these necessary.

The relatively smooth combination of the CAB - a group once described by respected former CBC news anchor and author Knowlton Nash as the “aggressive lobbying arm of Canadian private broadcasters” (Nash, 1994, p. 211) - with the CRTC, which oversees both public and private broadcasting, makes for strange bedfellows. The

CAB has existed almost as long as broadcasting has existed in Canada, and for much of that time it has been at loggerheads with both the federal government and those who view broadcasting more as a public service than an industry. Through the CBSC, the CAB and CRTC work in concert.

Despite the growth of its practice, there has been a dearth of scholarship and/or government reports on the continued place of co-regulation in Canada. At least one study has not been favourable in its review of the growth of co-regulation as it relates to gender issues in Canadian broadcasting. A 2001 analysis from Simon Fraser

University, Watching the Watchers: Gender Justice and Co-Regulation in the New

Media Marketplace, reached a clear conclusion in its study of media self-regulation in

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Canada: “Self regulation is not an inclusive process” and noted Canada would be

better served by “a model of co-regulation that is open, transparent and accessible to

the public” (Coulter and Murray, p. 105). Earlier in the study, the authors make the

following observation concerning co-regulation in Canadian media:

In this new era of media and media governance a detailed critical analysis of

the process of standard setting and of self-regulation from the perspective of

Canadian citizens has been overlooked. Clearly, there is need to question the

impact of this shift in the balance of power from government to industry

within the structure of the new media environment.

(Coulter and Murray, p. 13)44

The Dunbar-Leblanc study was far more positive in its analysis of this approach to regulation, calling the CBSC “a great success” (p. 19) but also noted some of the inherent dangers in this approach:

Industry self-regulation, when properly implemented and administered, can

result in achievement of policy objectives with less regulatory burden for both

the regulator and the regulated undertakings. However, it can result in the

substitution of private interests for public interests if it is not properly

structured. (Dunbar & Leblanc, p. 19)

44 It is noteworthy that the co-author of this study, Catherine Murray, served on the regional council of the CBSC for British Columbia in the 1990s.

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It is precisely this substitution of private interests in the public realm of broadcasting that has raised alarm about the co-regulatory process in this area. In one of the key international broadcasting policy texts of the last two decades, Regulating Media: the

Licensing and Supervision of Broadcasting in Six Countries, Wolfgang Hoffmann-

Riem accuses the CRTC of falling victim to a key concern for all co-regulatory initiatives. He writes, “…the CRTC has been accused of failing to apply forceful quotas and as such is a ‘captive’ of the private broadcasting industry it is supposed to regulate” (Hoffmann-Riem. 1996, p. 218). Again, the spectre of regulatory capture is the most serious impediment to co-regulation. Salter & Odartey-Wellington also express concern on the CRTC’s increased use of co-regulation. They note, “…codes are not regulations even when included as conditions of license” (Salter & Odartey-

Wellington, p. 778). Simply put, a system which relies on codes instead of clear and enforceable regulations increases the risk of industry capture and is not as strong in enforcing fundamental objectives. Codes “are about making broadcasting market- friendly and markets fair, as much as they are about strengthening broadcasting”

(Salter & Odartey-Wellington, p. 778).

Given earlier critiques that the CRTC had overextended its reach and was creating policy which should have been the position of government, the use of co-regulation, as embodied by the CBSC, presents a dramatic swing in the regulatory process. There has been little opposition to the work of the CBSC since it was formed in 1989 (the

CRTC seems quite happy to farm out the often tedious work of viewer complaints

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over content) and, while there has been some criticism, there has also been significant

praise (see Dunbar & Leblanc, p. 19).

Thus, co-regulation is not a development of the digital era; however, the work groups and task forces formed during the early years of the digital television transition represent a leap in co-regulatory broadcasting policy in Canada, with reach well beyond the oversight currently allowed the CBSC. The work of these groups was agenda-setting and cannot by any definition be viewed as within the public sphere.

Indeed, the power granted to these groups calls into question the legitimacy of the very democratic foundation of the digital television policy in Canada. The Canadian digital television transition has deferred to predominantly industrial organizations at three significant points in the early policy development, with decidedly mixed results.

5.3 Self and Co-Regulation and the Canadian Digital Television Transition

The digital transition in Canada has been strongly influenced by three key groups,

working with full CRTC support but very little by way of public or government input

in their working processes. The Task Force on the Implementation of Digital

Television, The Digital Migration Working Group/ Digital Code Working Group, and

Canadian DTV Inc (CDTV) each played a pivotal role in establishing early

parameters for the digital transition. The relation between each group and the CRTC

differs but the continued power given to these ad hoc organizations establishes a clear

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pattern of co-regulatory initiatives. The source of each group varied: the initial Task

Force was organized by Canadian Heritage, the two Working Groups were initiatives

of the CRTC, and the idea for CDTV was first proposed by the initial Task Force. A closer examination of these organizations demonstrates strong emphasis upon industrial input, coupled with a decidedly weak level of public engagement.

5.3.1 Task Force on the Implementation of Digital Television.

In recent decades the Canadian government and the CRTC have come to increasingly

rely upon Task Forces to examine specific problems within the Canadian broadcasting system. Since the 1980s, various key government and CRTC task forces have included the Task Force on Broadcasting Policy, or Caplan-Sauvageau Task

Force (1986), chaired by a respected academic (Florian Sauvageau) and politician

(Gerald Caplan); the Task Force on the Economic Status of Canadian Television

(1990), co-chaired by Jacques Girard of Société de radio-télévision du Québec and

former deputy minister of the Ministry of Education of Québec, and J.R. Peters, a

prominent member of the British Columbia broadcasting industry; the Task Force for

Cultural Diversity on Television (2002), comprised of five industry representatives and four non-industry representatives. In each case, in terms of the leaders of each group and general membership, a clear effort appears to have been made to strike a

balance between public and industrial viewpoints.

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This tradition of seeking to bridge the traditional solitudes of Canadian broadcasting

policy (public and private interest) was compromised at the earliest stages of the

digital transition. At the request of Canadian Heritage, a task force was assembled in

1995 whose primary concern was

to provide advice to the Minister of Canadian Heritage on the policy

framework required for the transition to digital television, and coordinate the

implementation of Digital Television in Canada.

(Canada, 1997, p. 7)

The pioneering work of the Task Force on the Implementation of Digital Television was the product of an overwhelmingly industry-based committee.

Consistent with the cost-saving ethos of co-regulation, the Task Force was set up under the auspices of Canadian Heritage but funding for the research and writing of the report was provided by the private-sector membership (Canada, 1997, p. 7). Thus the financing and composition of the group that initiated the digital television transition process in Canada is almost entirely outside the public realm. The Task

Force cannot be seen as wholly self-regulatory, as Heritage Canada had spurred its formation and some government representatives were involved in the process, albeit often in as a strictly observational capacity. Therefore the legislative ‘stick’ was there in the background, but it did not appear to be wielded with any authority.

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Table IV

Task Force on the Implementation of Digital Television

Group Industry Non-Industry Representatives (including CBC) Main Task Force Members 14 3: Canadian Heritage, (including resource people) Industry Canada, and Association of Tele- Education in Canada (+ 3 observers) Working Group 1: Policies 16 2: Canadian Heritage, and Regulations Industry Canada,

+ CRTC (observer) Working Group 2 - Economics and Consumer Services and Product 18 1 CRTC Observer Implementation

Working Group 3 - Digital 13 1: Industry Canada Television Technology

Working Group 4 - 10 1: Association of Tele- Production Considerations Education in Canada

(Source: Canada, 1997, Appendix 2)

There was no pretence of a public/private balance in the membership of this group.

The policy foundation of the digital television transition in Canada, as formed by this entity, was an almost wholly industry-based enterprise. There is nothing inherent in the nature of digital broadcasting which presupposes such an approach. For sake of

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appropriate comparison, of the 22 members of the U.S. Advisory Committee on

Public Interest Objectives of Digital Television Broadcasters, which operated during

roughly the same period, nine of the members can be viewed as outside of

commercial interests (Advisory Committee…1998, p. v).

When asked about the lack of public involvement in this process, Task Force chair

Michael McEwen expressed some regret.

In hindsight, that (lack of public input) was a mistake. …I think that

participation could have carried on through CDTV and it could have been

quite crucial to the implementation of the transition. We did have the

consumers association of Canada in some discussions but they weren’t very

effective. They weren’t geared up to deal with this. It became a battle

between broadcasters and distributors and no one was looking at the wider

picture, not even the CRTC or Heritage.

(McEwen, personal interview, April 23, 2009).

Key recommendations of the Task Force such as following the U.S. ASO date by two

years, the emphasis upon high definition, and fundamental choices such as the

selection of the digital system to be used set the stage for the next decade of the

transition in Canada. As Industry Canada has acknowledged, the spectrum-related technical recommendations of the Task Force provided the basis for the essential

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infrastructure supporting the digital television transition in Canada (Industry Canada,

2001).

The Task Force also set the stage for the overwhelming reliance upon industrial financing and expertise in devising the digital television policy plan for Canada.

5.3.2 The Digital Migration Working Group and Digital Code Working Group

In 2000, the CRTC continued this co-regulatory path in the digital television transition by asking industry to develop proposals to govern the migration of existing pay and specialty services from analog to digital distribution (CRTC 2000-113).

Again, the organizational impetus came from a public body (CRTC) but public representatives were clearly absent from the inner power structure. As noted in chapter three, only one public interest representative was part of the Group, and his involvement was minimal (he attended one of eight meetings). The report of the

Digital Migration Working Group, entitled The Distribution of Existing Analog Pay and Specialty Services on a Digital Basis (the Migration Report), was filed on

2 February 2001.

What is particularly noteworthy in the example of this Working Group was its clear ineffectiveness. With government all but absent from the picture, industry was unable

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to seize the opportunity and instead fell victim to territorial squabbles which

hampered progress and squandered an opportunity for industry to further seize the

policy agenda. The CRTC even went so far as to offer this group another chance,

calling for it to reconvene, only to see that group collapse before anything of

substance was accomplished (CRTC 2001-58).

The Group had a very specific mandate: to govern the migration of existing services from analog to digital distribution, taking into consideration the views and concerns

of consumers (CRTC 2000-113). The classic divisions between distributors and

programmers (or ‘pipes and content’) proved difficult to surmount. A major point of

contention identified in the migration report is whether or not the express permission

of programmers should be required for distributors either to migrate or duplicate

existing pay and specialty services.

This inability to reach consensus also blocked the second such working group struck

by the CRTC in the same period. In 2001, the Commission sought an industry code

developed and accepted by both programmers and distributors which could provide

additional guidance to facilitate the negotiation of affiliation agreements for the

carriage of new digital programming services. The Commission requested the

licensees of pay and specialty programming undertakings, those of BDUs, and their

respective industry associations, develop a code that would address such matters as

equitable terms of carriage, including launch arrangements, and undue preference or

disadvantage for the new digital services (CRTC 2001-57).

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Given the technical and contractual nature of the mandate, it is clear why the CRTC

would choose to allow industry a degree of autonomy; however, the Group consisted

of a fully commercial membership. The Digital Code Working Group consisted of

representatives of the Canadian Association of Broadcasters (CAB), the Canadian

Cable Television Association (CCTA), Bell ExpressVu Limited Partnership

(ExpressVu) and Look Communications Inc. (Look). On 9 March 2001, the

Commission received submissions from each of the working group participants

advising that they had been unable to agree on a detailed industry code with regard to the negotiation of affiliation agreements (CRTC 2001-57).

Thus, neither of the two industry working groups in the early years of the Canadian

digital television transition completed its mandate. Despite the obvious

shortcomings, the CRTC still saw fit to credit the Working Groups with having

“clarified or narrowed the outstanding issues” (CRTC 2001-58).

The experience of the Digital Migration Working Group and the Digital Code

Working Group clearly demonstrates the limitations of co-regulatory structures in

developing broadcasting policy. By removing government from the process the

system simply failed to work. This is why the notion of self-regulation, or further yet

deregulation, is not a viable option for broadcasting policy – industry requires

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oversight to set clear parameters and help resolve the inevitable disputes between

competing commercial interests, let alone the public interest.45

5.3.3 Canadian DTV Inc (CDTV)

Recommendation Three

To ensure an orderly migration to advanced digital television services, a not- for-profit corporation should be established to direct research and testing, identify and advise on policy issues and implement the digital television transition plan. (Canada, 1997, p. 15)

There is perhaps no single organization which played as large a role in the Canadian

digital television transition as CDTV, and certainly no group with as small a paper

trail. Very little is known or has been written about this non-profit industry group

which was prominent in the development of digital television in Canada between

1999 and 2006. CDTV grew out a recommendation from the Task Force on the

Implementation of Digital Television’s report Canadian Television in the Digital Era.

As indicated by the above passage from the Task Force report, this group had a much

broader mandate and was expected to have a much longer existence than the Task

Force itself or the Working Groups. CDTV was assembled to offer further advice on

a range of issues and monitor progress as the digital switch progressed.

45 In the three conflict dispute mechanisms outlined in 2008’s Regulatory frameworks for broadcasting distribution undertakings and discretionary programming services (CRTC 2008-100), all of the three involved a degree of involvement by the Commission itself.

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This group saw as its mandate to be involved in both industry and citizen education in the area of digital television. Along with industry development, it ran workshops for citizens and the production community on the challenges of digital television

(McEwen, personal interview, April 23, 2009). Canadian Heritage was kept abreast of CDTV activities but offered no financial support, nor direct involvement.

Likewise, Industry Canada supported many of the initiatives of CDTV but was not part of the decision-making process. It seems clear that for a nine year period CDTV was taking the lead on digital television initiatives in Canada. On January 4, 2001,

Industry Canada authorized CDTV Inc. to operate an experimental transmitter site in

Toronto, on a trial basis, to test DTV technologies and services (Industry Canada,

June, 2001).

CDTV was also responsible for pitching the idea of an educational campaign to alert and assist consumers, a concept later put into action by the CRTC on its website in

2009 (Industry Canada, June 2007). Michael McEwen was president of CDTV and remains a strong supporter of its efforts despite some trepidation about the motives of his industrial colleagues. In an interview he expressed concern that the progress of digital television was in fact impeded by the exclusively industry membership.

CDTV was a really good idea. …I sometimes wonder… if I put on my public

policy hat… if the industry was disingenuous and used the process to in fact

slow down the process. (McEwen, April 23, 2009)

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Unlike the clearly co-regulatory working groups and task forces involved in the

digital transition, CDTV is much more in the realm of self-regulation. The group was

initiated by a recommendation of the previous Task Force, not the government or

CRTC, and was not beholden to, nor financed by, any public body. Michael McEwen made it clear that neither government nor the CRTC played a role in the seven years of CDTV’s existence.

GT: I can’t find literature on CDTV.

MM: It wasn’t a public body.

GT: Isn’t there an inherent problem with that?

MM: Government didn’t give us money, there was no private mandate.

GT: You point out this (digital television) transition cuts to the heart of the Broadcasting Act. Where’s the public in this? Shouldn’t they have a seat at that table?

MM: Everybody else paid for it. Maybe the government should have paid for that. We needed government to say “guys, we need a plan you can all agree to or we’re going to give you one”. No one ever said that.

GT: In co-regulation, the government always has a stick in the background. Was there a stick?

MM: No.

GT: So this was self-regulation?

MM: In that sense it was. The CRTC made its views known of what its expectations were [sic] that we had any kind of direction.

(McEwen, personal interview, April 23, 2009)

While Michael McEwen was open and generous with his knowledge and experience,

email requests to see the archived records of CDTV were not acknowledged.

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Despite the clearly private nature of CDTV, it filled a policy vacuum that neither

government nor regulator had been willing to fill. The Canadian transition found

itself rudderless when CDTV ended in 2006. Michael McEwen lays the blame

squarely at the foot of the government. He claims CDTV presented a viable plan but it was not supported: “the real problem was Heritage disengaged. There was no will to put it into a framework” (McEwen, personal interview, April 23, 2009).

Conclusion

The clear examples of co and self regulation in the Canadian digital television

transition were certainly of their era. In Canadian public policy in the 1990’s, there

was a strong faith in the innate regulatory forces of markets, and industrially-based

objectives extended beyond the confines of broadcasting. The foundational

neoliberal principles of smaller government, and utilizing economic incentives

instead of regulatory intervention came to full fruition in this period. The acceptance

of this attitude was especially prevalent when the industry in question involved new

technology. The increased role for the private sector came at the expense of

traditional concerns for public participation and consultation in the process.

According to Darin Barney’s 2005 book Communication Technology, the Information

Highway Advisory Council, a government advisory council for digital

communications infrastructure established in 1994 (one year before the Task Force on

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the Implementation of Digital Television), suffered from a similar shortcoming to its

more television-focused cousins in “its neglect of the democratic imperatives of

inclusive participation and public engagement” (Barney, 2005, p. 46).46 He notes

that 62% of this Council’s members were representatives of the private sector; the

number for the main groups of the Task Force on the Implementation of Digital

Television is roughly 80%, and lower when one factors in the various working

groups.

Given the obvious democratic shortcomings in their membership and lack of public

engagement in the process, the public legitimacy of the digital television advisory

groups is certainly questionable, if not clearly illegitimate. When one compares these

groups to their predecessors such as the Caplan-Sauvageau Task Force (1986), or

even earlier studies by the Massey Commission (1951) or the pioneering work of the

Aird Commission in 1929, it is clear the tradition of public inclusiveness and consultation was cast aside for the sake of expediency.

Stefaan Verhulst stated in an interview that for a governance process to be legitimate it must meet four tests:

First, are decisions made in a transparent way? Not only open meetings but

having the decisions taken documented. Why did you come to this decision?

…Second, was there a way for participation?

46 Barney also references the National Broadband Task Force, formed by Industry Canada in 2000. Of the 34 members, 23 were private sector representatives (Barney, 2005: 51).

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…Third is representation. There is little user representation. It’s still run on

an idea of public trustees.

…The last test is the notion of accountability.

(Verhulst, personal interview, June 29, 2007)

The three early groups for developing the digital television transition in Canada fail on all four of these criteria. Starting from the bottom of the list, none of the groups was publicly accountable. One cannot even examine the records of CDTV. It is the very idea of democratic accountability - the knowledge that elected officials must answer to voters - that lends legitimacy to activities where the government is clearly represented. The government opted out of involvement beyond an observational capacity with these groups. On the third point, the absence of an even membership representation between public and private interests has been clearly noted. The second and first points are related: these groups did not feel obligated to engage in the time-consuming and expensive traditional practice of going out and holding public meetings in various parts of the country; therefore, there was little opportunity for participation and the transparency of the process was minimal. The process for these groups was exclusive and not subject to clear public or media scrutiny. There was only token government and public representation. In this sense it confirms

Venturelli’s concerns of co-regulation as an impediment to the effectiveness and responsiveness of democratic systems.

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Ideally a co-regulatory system recognizes the inherent challenges of avoiding regulatory capture and structures itself in such a way as to contain the natural industrial impulse to seek competitive advantage. In this sense, the Canadian digital television transition broke one of the key rules for sound co-regulatory governance.

In a study entitled Principles and Guidelines for the Community’s Audiovisual Policy in the Digital Age, the European Community, which strongly supports co and self- regulatory initiatives in broadcasting, outlines key parameters for its use:

Self-regulation must not be allowed to be used by major incumbent operations

to define "rules of the game" that are best suited to their own interest to the

detriment of smaller competitors and/or new market entrants.

(European Commission, 1999)

The four groups involved in the early years of the digital television transition were clearly involved in defining the rules of the game and were dominated by the major incumbents. The Digital Migration Working Group was largely unsuccessful due to infighting between the large established BDUs and smaller cable companies who did not feel their concerns were given fair recognition. In this sense these groups were an economic, as well as political, failure.

Gareth Grainger said that broadcasting is a mature industry that can well- accommodate a co-regulatory structure. It appears this is only partially true in the

Canadian example. The use of co-regulation in areas such as viewer complaints over content have by and large been well-served by bodies such as the Canadian Broadcast

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Standards Council – the work done by this organization allows the CRTC to dedicate

more of its time to “larger picture” issues, while remaining a clear force in the

background of all CBSC decisions. It is a complementary relationship which serves

both interests and the “stick” of regulatory force is visible.

However, another key question in this study pertains to whether or not digital

television is a replacement technology for a mature industry, and therefore more open

to co-regulatory initiatives, or something which presents new challenges? The

answer appears to be a little of both. The Digital Task Force report clearly stated that

digital broadcasting was to be a replacement technology for the Canadian system

(Canada, 1997, p. 28); however, there is much more to the digital television transition

than the relatively straightforward process of replacing one system for another. In

allowing industry to by and large set the agenda for this transition via co and self-

regulatory groups, Canada has chosen a path which places little emphasis upon public

interest objectives. The American example clearly demonstrates this does not have to

be the case.

When given the opportunity, industry has demonstrated an inability to construct a

viable, inclusive plan for the Canadian transition. Even members at the highest levels

of these organizations will concede this point. Certainly industry had to be involved

given the intricacies of the relationships between carriage and content; however, regulatory oversight was required for maintaining focus on greater objectives,

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including the public interest. As such, the digital television transition in Canada acts as a laboratory for testing the limits of co-regulation.

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Chapter Six: Conclusion

The transition to digital television in Canada encapsulates much of the greater regulatory practice common to the Canadian broadcasting industry since the 1991

Broadcasting Act. It is indicative of a hegemonic political orthodoxy, cloaked in the

promise of new technology, offering the seemingly endless appeal of consumer

choice and expansion for the national production industry. The digital television

transition also exemplifies the regulatory movement of the last two decades toward

light-touch regulation and deferring to co-regulatory bodies whenever possible.

Canada is not alone in pursuing a relaxation of the traditional broadcasting policy paradigm; however, in the case of digital television, Canada has taken a more industrial-driven path than either its U.S. or British counterparts (the systems against which Canada is traditionally compared) with decidedly poorer results.47

As is common in Canadian broadcasting history, the transition was spurred by the fact

that the United States was about to embrace a new technology and Canada risked

falling behind. Unlike other pivotal developments in Canadian broadcasting (advent

of radio; launch of television; development of cable and colour television), there

appears to be a minimal amount of consideration for the national benefits of this

47 U.K. scholar Des Freedman has been critical of both the UK and US approaches: Perhaps the imposition of DTV is the ‘right’ thing to do and an example of proactive and responsible government in shaping the future of its citizens. The problem is that, even if this is the case, the USA and the UK governments have failed to engage their citizens in the kind of conversation that is supposed to be the hallmark of pluralist democracy and democratic politics. (Freedman, p. 185)

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technological juncture, aside from the increased opportunity for commercial growth.

The Aird Report of 1929, Fowler Report of 1957, and the Fowler Report of 1965 each addressed crucial moments in Canadian broadcasting technology, but these studies followed public consultation procedures (less so for the Fowler report of 1965, which was an advisory committee; see Raboy, 1990, p. 161) and their conclusions considered the political opportunities afforded by the “critical juncture” (Canada,

1929; Canada, 1957; Canada, 1965). It would be naïve to think industrial concerns were not also paramount to these earlier transitions, but the transparency, inclusiveness and scope of vision of previous groups charged with overseeing upheavals in broadcasting far exceeded the relatively feeble efforts at public outreach for the digital television transition.

The Public Interest

A University of British Columbia Press series of books entitled The Canadian

Democratic Audit, released in 2005, attempts the formidable task of analysing the state of Canadian democracy at the beginning of this new century. The series director,

William Cross, identifies three relatively simple benchmarks to measure democratic vitality in Canada: inclusiveness, public participation and responsiveness (Barney,

2005, x). It is fair to say the policy process surrounding the digital television

transition in Canada would fall well short for each benchmark. The process involved

a limited range of viewpoints, was not open to the public, and responded primarily to

commercial imperatives.

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There is little doubt, that by any definition, the public interest has been compromised

in the Canadian digital television transition. As noted by Michael Feintuck, there is a

strong correlation between the public interest (a founding principle of broadcasting

policy) and democratic imperatives; in particular the idea of equality of citizenship.

In his writings on citizenship, T.H. Marshall also notes the value of equality,

community and social heritage. It is hard to envision how this public interest has

been served by the digital television transition.

Even if one were to accept the position of former FCC chair Mark Fowler that the

public interest is largely a matter of consumer choice, this transition process, now into

its second decade, has thus far not provided for greater selection or a more efficient

system for Canadian viewers.48 The American and British examples, where government and regulator assumed a stronger position, have been far more beneficial for consumers and citizens (McEwen, 2006). These systems are following a clear schedule, have well-run educational campaigns, and offer clear benefits to television viewers (Freeview in the UK, rebate vouchers in the U.S.). By any empirical measuring stick, the Canadian transition, with its market-led approach, has underachieved against the countries where there was more public regulatory oversight. Efficiency, the common refrain of neoliberal advocates, has in this case proven a hollow slogan.

48 Though there has been a recent increase in HD programming production (see McEwen, 2009).

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In Canada, many of the critical communication school (Smythe, Raboy) have

traditionally taken combative positions against the overwhelming interests of private

enterprise within the broadcasting system. The public interest as it has evolved in

broadcasting policy worldwide is largely associated with the rise of the welfare state.

However, the situation surrounding the Canadian digital television transition is

unique and perhaps indicative of a dramatic leap in the evolution of regulation in the broadcasting sector. Instead of merely increasing the potential for private growth in the sector, which one may argue has been common in Canada since the Massey

Commission of 1951; in the process of the digital television transition the interests of private industry were given a lead role to guide the transition itself. To employ the nautical metaphor common to discussions of government: industry was not merely involved in charting the course, it was steering the ship.

Such industrial autonomy is unprecedented in Canadian broadcasting policy. Having received more policy leeway than at any critical juncture in Canadian broadcasting

history, the broadcasting industry subsequently failed to provide the kind of foresight

and compromise required to guide a system as complex as Canadian broadcasting.

The very commercial interests charged with this responsibility have proven incapable

of the task, creating problems for the overall system, including the private sector.

Testing the Limits of Co-Regulation

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In October of 2008, former U.S. Federal Reserve chairman Alan Greenspan was

called before a Congressional hearing into the dramatic financial collapse engulfing

the world economy. He declared there had been far too much faith placed in the self-

regulating forces of the market, and those who had espoused the virtues of an

unfettered marketplace, himself chief among them, were “in a state of shocked

disbelief” (Andrews, 2008). A general consensus has since developed that government involvement will be essential to global economic recovery. 49 Lack of

regulation is no longer considered an option – a stunning reversal of decades of

economic theory.

The digital television transition may eventually be viewed as the crest of the

deregulatory movement in Canadian broadcasting. It has certainly taken light touch

regulation to new levels. Spurred by neoliberal economic philosophy, the

foundational texts of which (Friedman, Hayek) were written in the post-WWII era but

found audiences in the halls of power in the 1980s, the weakening of the position of

the public regulator continued virtually unchecked for two decades in the 1980s and

1990s. In 2009, calls for further economic deregulation have all but subsided, or left

to the margins of the debate, to be replaced by a renewed emphasis upon the place of

regulation. It is still too early to speculate if this economic policy reversal will

eventually trickle down to broadcasting policy as its neoliberal predecessor had done;

49 A 2009 New York Times editorial notes: “It is the result of antiregulatory bias and deregulatory zeal — ascendant over the last three decades, but especially prevalent in the last 10 years — that eclipsed not only rules and regulations, but the very will to regulate” (NY Times. March 18, 2009. Editorial)

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however this dissertation has demonstrated the historic link between prevailing

economic doctrine and broadcasting policy.

This dissertation has argued there never really was deregulation, more of a re-

regulation in line with more commercial interests.50 There is still regulatory structure, it just reduces or omits many of the public interest elements germane to the

traditional process in Canadian broadcasting policy. This new co-regulatory

structure allowed commercial interest to take a lead role in the digital television

transition.

In theory, the inherent benefit of co-regulation is that it is thought to be far more

efficient and flexible than a more public-centred approach such as a government

commission. The process of Canadian digital television may very well have been

expedited by overstepping the democratic process which Darin Barney acknowledges

as being

…slow, ponderous, risk averse, prone to reversals, lacking in clarity, easily

seduced by superficial imaginings, and often irrational: qualities inimical to

technological enterprise (Barney, 2005, p. 11).

But to what end? By the CRTC Chair’s own admission industry has been “dragging

its heels” and he is greatly concerned “that the industry will not be ready” for the

2011 OTA shut-off (von Finckenstein, 2008). A more democratic process may in

50 One area of Canadian broadcasting regulation where the term “deregulation” may apply is in BDU regulations for basic service rates, which were eliminated in the BDU Regulations in 1998

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theory be slower, but the results of this largely co-regulatory enterprise have not

achieved the results desired by any of the participants, save perhaps those who wish to slow down a transition they saw as unprofitable.

This is not to say co-regulation in Canadian broadcasting is a completely failed experiment. While recognizing the position taken by Coulter and Murray (2001), the work of the Canadian Broadcast Standards Council has proven generally effective in dealing with matters of viewer complaints. Yet even here the emphasis upon co- regulation and not self-regulation is paramount. As a clear contemporary example, when the CBSC originally introduced the Journalistic Independence Code in 2002, a plan to grant private broadcasters increased autonomy to regulate their news departments, it contained no allowance for journalists themselves to preside on the panels which would administer the requirements of the Code. Journalist organizations protested during the public hearings held by the CRTC in 2007. As a condition of acceptance of the Code in 2008, the CRTC instructed the CBSC to have a minimum requirement of professional journalists on all adjudication panels (CRTC 2008-95).

This example again demonstrates the continued relevance of the regulator’s “big stick” and the value of inclusive public hearings. A closely monitored co-regulatory body may work in a clearly defined role, but the role of the public regulator emphatically remains and true self-regulation simply will not work.

More than one source for this dissertation has noted that in order for co-regulation to be effective the objective must not be too fundamental and essential issues such as

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citizen equality must not be involved (Schulz & Held; Mandelkern). It may be that

the digital television is simply too large and fundamental an exercise for the

application of co-regulatory practices. Digital television is more than a simple

replacement technology – its exponential increase in capacity (and ensuing issues

over spectrum space), accompanied by increased power in the hands of viewers over

scheduling and channel selection, and the very real possibility of removing millions of Canadians from the system, make this far more significant than other technological leaps such as moving from black and white to colour. Questions of access and control are at the essence of the Broadcasting Act and have profound implications for greater notions of citizenry.

The CRTC has thus far placed too much emphasis upon industry-led bodies charting

the course for the digital television transition. A common refrain from those engaged

in these debates is that the issues involved are too complex and require the expertise

that can only be obtained through the work of industry. The case of the United States

proves this wrong. The U.S. has had a far more engaged political and civil society

presence in the digital television transition and they achieved their analogue shut off

date of 2009 (six month delay) and the FCC has also taken the bold step of granting

the wish of civil society (and computer) groups to see areas of the spectrum set aside

for public use (see “white space”). The digital television transition serves as a

significant case study of the changing role of government and civil society

organizations in over media governance structures.

To What End?

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The digital television transition has pushed the limits of co-regulation in Canadian

policy and even allowed for a body than can be described as self-regulatory (CDTV)

to assume a central role. It is then legitimate to ask: what exactly has been lost by

having relatively closed sessions on the future of digital television in Canada? There

is little doubt that the industrial groups proposed ideas which would protect their

interests – they would be foolish to do otherwise. But a key question remains: what might have been done differently in a more open and inclusive process? It is incumbent on academics to not merely criticise after the fact – what Langdon Winner labels as “impact assessment”, memorably described as “After the bulldozer has rolled us over, we can pick ourselves up and carefully measure the treadmarks”

(Winner, p. 10). If academia is to accept Robert McChesney’s challenge which

launches this dissertation and be a “leading participant” at this juncture, one must

resist the relatively easy temptation of impact assessment.

After surveying the literature and policy announcements in Canada and elsewhere

there appear to be (to borrow a phrase from Marc Raboy) clear “missed

opportunities”. A more engaged public in the digital television transition would offer

the occasion to:

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1) Think critically about potential public use for the spectrum space freed by

digitalization, as demonstrated in the current American debate over “white

space” – a discussion yet to happen in Canada.51

2) Assess the value of the rigid pursuit of an all-HD system. HD certainly

helps Canadian producers sell their products abroad but would Canadians be

better served by a wider range of options in standard definition (SD)?

3) Recognize the opportunity digitalization presents to allow new entries into

the broadcasting system, as has been done in the spectrum auction for

telecom, where space was set aside for new entrants in the market.

4) Strengthen the position of the national public broadcaster (CBC) by

utilizing the multi-platform potential of digital production, such as the BBC

has done in the UK.

5) Examine the increased possibilities for quality children’s and educational

programming – programming traditionally anathema to private broadcasters.

6) Evaluate the role currently played by Canadian broadcasting during

elections and assess areas for improvement. Canadian voter turnout continues

to plummet and television remains the country’s most powerful source of

51 In 2008, the Federal Communications Commission unanimously agreed to open up unused broadcast TV spectrum (so-called “white space”) for unlicensed use.

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information – it makes sense that the relationship between television and the

greater electoral system be appraised. The United States was more aggressive

in pursuing the potential benefits of digital television for the electoral system.

7) Reinforce the centrality of OTA broadcasters within the system. The

Canadian system needs to move beyond rhetorical endorsement in this sector.

This could be done by temporarily relaxing certain obligations, as is common

when dealing with new technologies (see mobile television), while

broadcasters invest in new technology. Canada could also allow for greater

HD OTA choice, opening the sector to new entrants and making traditional

broadcasting a challenge to BDUs (this is unlikely to happen in a co-

regulatory environment where the OTA broadcasters are also heavily invested

in highly profitable specialty channels). 52

None of the seven points mentioned above were addressed with any vigour by the mix of industry and regulator used in the Canadian transition. This list is by no means complete, but it does demonstrate how the policy focus thus far in the digital television transition has been about protection of industry and loosely-defined

52 The following transcript of the interview with CDTV Chair Michael McEwen expands this point:

GT: Have we placed too much time and emphasis upon HD?

MM: It’s an interesting point and one at the time I did consider. But given our connection to the United States, who were touting the benefits of HD, we didn’t have a choice. …We looked at the multi-channel argument but you have to start multi-channel services. Broadcasters who weren’t invested in pay and specialty services were trying to invest in pay and specialty services. …I tried to get the broadcasters to invest in a multi-channel strategy. I thought a service like CP24 should have been put on a sub carrier of City TV’s signal. The problem was that the CRTC wanted it licenced and CityTV would have been worried they could not get fee for carriage on cable if they also broadcasting it over the air. So in fact the system mitigated against the development of multi channels.

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national culture, not fostering a robust democratic foundation for Canada. It is

possible that accusations from the 70s and 80s that the CRTC was “out of control” have caused the regulatory pendulum to swing too far in the other direction; one where the CRTC is uncomfortable assuming a stronger role amid an overwhelming political consensus for “smart” or “light touch” regulation.

The extent of the policy pressures against regulation are clarified by a submission from Astral Media for the 2007 CRTC hearings on Broadcast Distribution

Undertakings (CRTC 2007-10). In its submission, the company (whose president is

former CRTC chair André Bureau) chastises the CRTC for being too hands-off:

…the Commission's description of this issue suggests two broad approaches

or options for modifying the existing regulatory frameworks, namely a) the

option of maximum deregulation, which would see the broadcasting system

rely essentially on market forces; and b) the option of a regulatory framework

that would be lighter, but that would still have some substance.

The Commission takes an asymmetrical approach with respect to the burden

of proof that proponents of these two options are required to meet. The

Commission indicates that proponents of the second option will have to

provide concrete evidence in support of their position, as follows: "In general,

the Commission will expect parties arguing for continued regulatory

intervention to provide a full rationale for that intervention, with supporting

evidence, to establish that such intervention is essential to the objectives of the

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Act" (paragraph 16). It does not, however require proponents of the first

option to provide such evidence. (Astral, 2007, p.38)

According to this member of the industry the overall deregulatory policy structure is designed to benefit, the CRTC has gone too far in relaxing regulation. This submission also exemplifies the inherent problems in placing too much emphasis upon market forces as a regulatory paradigm: the broadcasting system is too complex with too many competing interests at play to think the system will generate consensus without guidance from a public regulator. In this case Astral, a broadcaster, is concerned that the regulatory process is stacked in favour of the BDUs by requiring evidence for regulatory intervention but not arguments for deregulatory proposals.

This example is indicative of the greater policy direction of the digital television

transition, one which left industries with often incompatible interests to try and chart

a regulatory course.

Policy, Regulations and Technology

Despite its structural complexity, there is nothing inherent in digital technology that

requires it be largely sheltered from democratic scrutiny. Technical complexity is

always a factor in broadcasting. The Information Highway Advisory Council, which

studied internet and ICT issues in the 1990s, justifiably faced strong criticism for its

lack of inclusiveness for its relatively closed approach, yet it still had a higher

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percentage of representatives from outside the private sector than the digital

television groups. One may argue, that IHAC’s work took place largely outside the

public radar and there was no effort to bring the hearings to the Canadian people as

had traditionally been the case; however, there were still many critics from academia

and elsewhere who were quite vocal in their protests and made efforts to hold the

policy procedure accountable to the public (Barney, 2005, p. 46-47). Once again the

same cannot be said of the digital television transition in Canada where civil society

has been by and large silent.

The divide between the early policy and later regulations of the CRTC revealed much

about the weaknesses of the early approach and the increasing political calls for change. The early discourse in the transition was entirely market-centred, with a clear and oft-repeated consensus that a policy structure which allowed industry to set the pace of change was the clear and correct path for the first decade of the Canadian process. The regulatory practice of this period was one of deferring to industry.

Voices calling for a change in strategy grew during the period between 2003 and

2006: Our Cultural Sovereignty, Michael McEwen’s 2006 report, the 2006 Dunbar

Leblanc Report, Industry Canada, and even voices from within the broadcasting industry called for the CRTC to set a clearer agenda. It was following the combined efforts of these high-profile challenges that the CRTC in 2007 finally set an ASO date for OTA broadcasts of 2011 – this was hardly a dictatorial stance but it did send the message that the CRTC was taking a more direct involvement.

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This dissertation has attempted to demonstrate the economic and political

circumstances at play which brought about this clear discursive shift. Under the

approach of argumentative discourse analysis “the key to explaining how change

comes about has to be grounded in a detailed contextual examination of the

circumstances at play in specific cases” (Fischer, 2003, p. 108). The change in the

Canadian approach to the digital transition was foremost the result of the clear failure of the early industrial groups to reach consensus. The four industry sectors analyzed in chapters three and four provide clear case examples for the shifting policy structure.

It was apparent in the pay and specialty proceedings that the CRTC placed a great deal of emphasis upon protecting incumbent interests. Established analogue broadcasters and distributors were given the opportunity to present their own plan for transition – a luxury not afforded new players. Notwithstanding the pro-market discourse, there was hesitation to relax regulation designed to support this industry such as genre exclusivity. Despite the unfounded forecasts from industry that their swelling revenues would soon reach a plateau, the later stages of the transition regulations removed genre protection for sports and news programming.

The regulation surrounding high definition was a muddled element of the digital transition. This case was a reversal of the dominant approach: the CRTC set fairly aggressive benchmarks for HD for pay and specialty channels early in the transition – if broadcasters wished to keep their must-carry obligations and genre-protection they

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were obliged to meet explicit criteria. The later regulations contained lower

benchmarks and later saw those lesser standards removed altogether in favour of a more strictly market-based approach. Specialty channels may have lost some genre exclusivity but they made gains in the debate over HD levels.

BDUs continued to assert their dominance in the Canadian system and recognized the opportunity digital broadcasting affords them for a further consolidation of power.

More than once the CRTC has had to tell a BDU that it was overstepping its area of authority. This remains a difficult area to speak of in general terms because the particular characteristics of cable and satellite make for unique concerns. When new regulations are introduced for BDUs, such as was the case in 2008, the implications ripple throughout the greater system.

Over the air broadcasting remains the most problematic and contentious area of the digital transition. Despite the emphatic statements that OTA broadcasters are the key to the system, there are legitimate concerns that the sector will not be ready for the

2011 ASO. This sector is replete with concerns over an informed citizenry that is not the experience among specialty channels further up the dial. The declining revenues of these broadcasters threaten the existence of OTA television in a few years time.

From an economic standpoint, it makes little sense to invest in digital transmission facilities when higher profits are to be made by owning specialty channels and hitching on to BDUs which enjoy 85% household penetration. In the near future, it is

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OTA broadcasting which will demand the most creative regulatory thinking from the

CRTC.

Areas for Future Study:

There is obviously still much work to be done for the Canadian digital television transition, regardless of whether or not the 2011 ASO date remains a feasible objective. This dissertation has repeatedly emphasized that digital television has been happening largely free from academic scrutiny, especially when compared to the

(worthy) attention garnered in the same period by the internet and issues of copyright and privacy in digital communication. One may only speculate as to why a country as strong in the tradition of critical political economy in communication as Canada would largely ignore this matter. It may very well be that television is seen as somehow passé, even though it still remains the dominant medium in the country.

More likely, the closed nature of the transition has blocked many people’s view that this juncture in television’s history opens a brief portal where there are clear opportunities to fight some of the problems which have surrounded television for decades: concentration of ownership; lack of community broadcasting; a weakened public broadcaster; poor children’s programming and educational material; diversity of viewpoints and cultural representation; and others. Given that all areas of television broadcasting must be adjusted to incorporate the digital transition, the time

is ripe for great improvements in what is still the world’s most powerful and influential medium.

Former CRTC commissioner Richard French stated in an interview

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The purpose of academia is to nourish a debate and a discussion hopefully by

doing work that is intellectually rigorous and not unduly influenced by

corporate interest.

(R. French, personal interview, April 9, 2008)

Future studies in digital television will require going deeper into the particular

industries involved and recognizing the posturing that is part of the policy process.

As the Canadian transition thus far has ably demonstrated, there is no singular

“broadcasting industry”; there are however a number of complementing and

competing industries that jockey for positions of power and influence, both in relation

to the government and regulator, and among each other. The power dynamic of the

greater system can reveal itself by examining an individual piece.

1) Small Cable Systems

A group which deserves greater recognition is the Canadian Cable Systems Alliance –

the group which represents over 100 small cable companies around the country. The

cable industry in Canada is a highly profitable business dominated by large companies: Rogers, Bell, Shaw, Videotron and Cogeco; however, the CCSA

succeeded in making its voice heard during the digital television transition. In

particular, the small cable companies managed to derail efforts of the Digital

Migration Working Group which they thought favoured the larger cable companies and in the end succeeded in having a separate agreement created for their industry:

Small cable systems - Digital migration policy (CRTC 2001-130).

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Further study into the efforts of the CCSA in Canada may be useful to inform future discussion on a major problem in the Canadian system, that of ownership concentration. Despite frequently challenging the most powerful sector of the

Canadian broadcasting system, the large cable companies, t he members of the CCSA have managed to be a formidable presence at regulatory hearings and develop a substantial crack in the otherwise wall of ownership in the Canadian cable industry.

2) Preponderance, Tier and Linkage Requirements

These three regulations are designed to ensure that Canadian voices remain strong in the expanding choice offered to Canadian viewers. Each of these instruments, from what Grant and Wood call the “cultural tool kit”, are increasingly challenged under digitalization (Grant & Wood, 2004). Preponderance is the regulatory method which dictates the services offered by BDUs will have a majority of Canadian channels per cable package. Tiers are the various levels of channels, formulated by the CRTC, which indicates a channel’s significance in terms of contribution to the requirements of the Broadcasting Act. Linkages are the regulations designed which require a number of Canadian channels added to BDU carriage per certain number of foreign channels offered. These cultural tools are clearly based upon an analogue paradigm where channels were far more limited and a selection process by the viewer (so-called

à la carte option) was not feasible.

Digital transmission has changed this process, placing far more potential for viewer choice. It is safe to say the tier, preponderance and linkage requirements will face

275

increasing challenge in the years to come; therefore it will be necessary to examine

the foundation of these policies and ask if the objective is still worth pursuing. The fate of these policies in Canadian broadcasting will have an enormous impact on whether or not the Canadian system offers Canadian material, or even if television can be considered a shared experience for Canadian citizens. Will a generation raised in the borderless world of the internet even care about such things?

In one of the few forward-thinking concepts offered in this area from industry, the multi-faith broadcaster VisionTV recommended that the CRTC preserve a public

"green space" in the broadcasting system, reserving low number channels for services

mandated to address identifiable public policy goals, rather than commercial interests

(CRTC 2005-1; Canada, 2003, p. 223-224). This idea was brought forth to both the

CRTC and the Heritage Committee under Clifford Lincoln.

The problem with any change to the use of preponderance, tier and linkage requirements lies squarely with the Broadcasting Act which states

(t) distribution undertakings

(i) should give priority to the carriage of Canadian programming services and,

in particular, to the carriage of local Canadian stations (Canada, 1991, 3, 1,t)

Therefore, if one were to search for a fresh alternative to these approaches, the new structure would still have to give priority to Canadian services or there must be a

change in the Act, the primary objective of which states

3. (1) It is hereby declared as the broadcasting policy for Canada that

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(a) the Canadian broadcasting system shall be effectively owned and

controlled by Canadians (Canada, 1991, 3, 1,a)

While tier, preponderance and linkage requirements face great challenges in digital

broadcasting, any alternatives must confront fundamental policy underpinnings of the

Canadian system. Further research could examine the continued feasibility of these policy tools, and indeed the Broadcasting Act itself, given the fundamental changes linked to the digital paradigm.

3) Wholesale rates

The relationship between specialty channels and BDUs is likely to grow increasingly

difficult in the years to come as greater numbers of channels are introduced. The

lynchpin on which this relationship is built is the wholesale rate – the income which

the specialty channel receives from the BDU per subscriber. Once again, this

traditional arrangement is challenged by the increased capacity under digitalization

and the overall movement to light regulation. The amount of this fee is consistent

with the number of residences which receive the service. In the past, this wholesale fee for channels has been regulated by the CRTC. In the Digital Migration

Framework, the Commission determined that it would no longer regulate the

wholesale rates after the digital switchover, except the essential 9 (1)(h) services

(CRTC 2006-23). The deregulation of wholesale rates has profound implications for

funding of Canadian channels and television productions.

277

Wholesales rates are a major area of contention within the industry and one where

academic scrutiny could provide needed clarity. As the digital transition has made

clear, the relationship between BDUs and broadcasters in Canada is contentious.

Deregulating the wholesale rates places the BDU in a very powerful position.

Programmers are generally in favour of a regulated wholesale rate, and negotiated

wholesale fees also put smaller cable companies at a disadvantage (CRTC 2005-23).

In the next few years, it will be interesting to examine the impact of this change in wholesale rates at the production level as well as the impact upon Canadian cable

subscribers. This is an area of the system most viewers never consider, yet is an

essential component in the economics of Canadian broadcasting.

4) The CBC

The CBC has not received its due recognition in this study, largely because public

broadcasting exists in a different economic reality (though steadily less so) than its

private sector counterparts. As stated on page 224, the CBC was involved in the

industry groups which initiated the digital television transition in Canada and shares

many of the concerns of the private companies; however, that is not to say that CBC

and private apprehensions are one and the same. The main reason this dissertation

generally avoided discussing the concerns of the CBC is that so many of them boil

down to political issues of funding, which are beyond the scope of this study.

278

The CBC, and public broadcasting in general, has a unique perspective in the digital television transition. The public broadcaster was one of the few broadcasters commended by Michael McEwen for taking a leadership role in the introduction of digital television (McEwen, 2009). Further study into the distinct challenges faced by the CBC and its particular role in the digital transition may shed light into future directions for the national public broadcaster.

“Let us always remember the power of an informed public mind”

– Joseph Pulitzer quoted in Kenneth Whyte, The Uncrowned King, p. 453.

Canada is a country with a lot of television. The variety of domestic services

available to Canadian viewers is greater than that of any other country except the U.S.

(CRTC 2008, p. 17). In terms of available content for Canadian viewers, the CRTC

regulatory approach over the last two decades has been a resounding success.

However there are nagging concerns over the broadcast of domestic productions, the

health of the public broadcaster, the increasing power of BDUs, and the future for

OTA broadcasting. All of these issues have been brought to the fore in the digital

television transition.

The CRTC remains the site where most of these battles are fought, though to truly

grasp the essence of the conflict it is often necessary to go beyond the surface

discourse and examine the economic and political realities that give rise to current

dilemmas. The history of Canadian broadcasting has been far too focused on elusive

279

concepts of Canadian culture, which can often be a distraction to more pressing

matters of democratic legitimacy. In 1943, BBC correspondent Clement Fuller wrote

a letter to the BBC London office which observed “the statesmen and teachers of

Canada have spent two earnest decades struggling to induce a new self-conscious

nationalism in Canadians to whom it does not come naturally” (Fuller, C., 1943). Safe to say this struggle has never abated. One must be suspect of overt nationalism in the

Canadian broadcasting policy arena -the cultural argument in Canada has been commodified. Industry long ago figured out this game and is adept at presenting its plans before the CRTC as being in the best interest for Canadian culture - a more cogent issue are the essential public interest facets in broadcasting policy related to questions of citizenship.

Though this dissertation has been critical of the CRTC during this crucial juncture, it

does not deserve the lion’s share of the blame. The haphazard approach to the digital

television transition is largely the fault of government, both Liberal and Conservative.

The CRTC has stepped in to the fray because the Canadian government never provided the necessary guidance, as was the case in the United States. The CRTC followed the direction for “smart regulation” and imposed regulations only after industry was given the chance to offer its own plan. The digital television transition is an extremely complex undertaking and involves a number of actors from both the public and private sectors. Enabling such a process have proven beyond the capacity of co-regulation and reinforced the essential role of the public regulator in the

Canadian system.

280

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